Santa Cruz Real Estate Articles

News and Information you need when it comes to Santa Cruz Estate!

Dec. 21, 2018

Low-Down Payment Santa Cruz Mortgage Loans

Did you know that for qualified buyers, you can get a Santa Cruz home loan without monthly mortgage insurance payments but still put less than 20% down?  In fact, you can even get a conventional loan in Santa Cruz, with no mortgage insurance, with just 3% or 5% down!

Fannie Mae and Freddie Mac both have a loan program that allows buyers with higher credit scores and strong job history to obtain a loan that is competitive with FHA with the added benefit of not having a monthly mortgage insurance premium. 

This allows Santa Cruz home shoppers to avoid the costly payment of hundreds of dollars a month included in the mortgage. Rates and costs are usually a bit higher on these programs, but well worth it over the long run when you place and compare the two options side by side with another loan program like FHA. 

Mortgage insurance goes by many names: PMI, MIP, MI … but they all mean the same. Mortgage Insurance is added for the protection of the bank. In case the borrower defaults, the private mortgage insurance will pay the bank’s losses in the event of foreclosure. After the Great Recession, banks became wary about lending to borrowers with low down payments, but mortgage insurance changed all that. It really has no benefit to a homebuyer aside of allowing them to access housing, since without it, a bank would not lend with such a small down payment. 

In the No Monthly Mortgage Insurance program, it is still technically being paid, but it’s just rolled into the cost (interest rate) of the loan. 

This is a great option when putting in offers in this competitive market. It gives a buyer another advantage over other buyers that are only qualified for FHA. In general, FHA requires a few more items in regards to property condition and underwriting/approval conditions so a conventional loan is a good alternative when properties need a little work. In addition, sellers in Santa Cruz are more inclined to accept a conventional loan offer as this proves that there is a stronger buyer behind that offer since typically banks require more stable and higher credit along with strong job history to obtain a conventional loan. 

With slowing appreciation in the real estate market, this will be a good option to avoid having to pay mortgage insurance for many years to come.

If you have any further questions or questions on qualifying, please reach out to our preferred mortgage specialist who will be happy to help:  Victor Romero with Santa Cruz Lending, or 831-214-2172.




Dec. 20, 2018

Loan to Replace an Old Manufactured Home in Santa Cruz

Recently I was asked if there is a loan available in Santa Cruz for replacing an old and run down manufactured home in a park with a brand new unit.

In this specific case, the borrower owned an old manufactured home in Santa Cruz (Aptos, actually) which he owed a small amount of money on. It was in a park where the owner also owned the land. It was his primary residence. The land itself was worth more than the loan amount owed. He had good credit but did not have enough money to buy a new unit for cash and have it replaced.

After contacting HUD regarding this (they administer FHA loans) it was determined that they allow for this type of situation in Santa Cruz (and any other county, for that matter). The FHA 203k allows a borrower to replace an old manufactured home and refinance the old loan into the new one as part of the process. This includes the cost to purchase the new manufactured home as well as the placement of the new unit onto the existing foundation of the old manufactured home.

Minimum Home Loan Amounts

As not much was owed, and as the borrower did have some cash to put into the deal, one question that came up was, what is the lowest loan amount a borrower could apply for?

In general, there is no limit for the lowest amount a lender in Santa Cruz will lend you. But a good rule of thumb would be $50,000.

Why is that?

It comes down to a series of complicated rules that the government imposed on lenders. In addition, banks face profit issues with small loans.Minimum Home Loan Amounts

One of these rules is that in general the government stated that you cannot charge a borrower more than 5% of their loan amount in fees to get the loan. These fees include title company fees and processing and underwriting fees (my preferred lender =charges $875 for underwriting and $775 for loan processing, or $1650 combined).

They were looking out to help homeowners not get taken advantage of form unscrupulous lenders. Seems straight forward for a 500k loan not to have fees that exceed 25k right? But what if the loan is 50k, with the title company cost ($900-1700) and standard processing and underwriting fees ($1,650), it’s pretty easy to go over the 5% of 50k or $2,500 and be close to breaking some major rules with the Fed.


Dec. 15, 2018

Santa Cruz FHA Loan Limits Increased for 2019

Good news everyone - Santa Cruz FHA loan limits are back on their way up!  Recently, the Department of Housing and Urban Development (HUD) announced a new schedule of FHA loan limits for 2019.  Most areas in the country will experience an increase in loan limits in the coming year.

See highlights below:

  • Low-cost area limit: $314,827 (increase from $294,515 and still 65% of the national conforming limit)
  • High-cost area limit: $726,525 (increase from $679,650 and still 150% of the national conforming limit)
  • Limit in Hawaii, Alaska, Guam, and VI: $1,089,787 (increase from $1,019,475)
  • Maximum claim amount for HECMs: $726,525 (increase from $679,650 and still 150% of the national conforming limit)

HUD said as a result of "robust increases" in median housing prices and required changes to FHA's floor and ceiling limits, which are tied to the Federal Housing Finance Agency's increase in the conventional mortgage loan limits for 2019, the maximum loan limits for FHA forward mortgages will rise in 3,053 counties. In 181 counties, FHA's loan limits will remain unchanged.

It is important to understand that that while the FHA loan limit in Santa Cruz will be $726,525 for 2019, the maximum purchase price of a home is not limited - merely the size of the loan is limited.  FHA does require a minimum down payment of 3.5%, so with a down payment that size the maximum purchase price would be $752,875.

However, Santa Cruz home buyers can put much more than 3.5% down on a home loan - however even if borrowers put down 20% on a FHA mortgage, the borrower will still be required to pay mortgage insurance for the life of the loan.  Most borrowers with higher down payments will use conventional financing, but FHA loans are the "go to" loan for buyers with smaller down payments.


Dec. 6, 2018

Buying Santa Cruz Bank Foreclosed Homes

Santa Cruz Foreclosure bank-owned REOWhy are so many people interested in buying a Santa Cruz bank foreclosed home?  It's true that everyone wants a new home that will fall within the price range they have in place. Properties, especially those in coastal areas, have very high values and getting these properties at an affordable price is becoming very difficult for many buyers in Santa Cruz.

When you search for homes that meet the characteristics and location you want, you often get discouraged by the high prices. The good news is, you don't have to subject yourself to the costly situation of open market since there are lucrative investment opportunities in bank-owned "REO" foreclosed homes. So, you can opt for bank foreclosure properties when you need a new home with a good discount price.

Bank foreclosure properties in Santa Cruz take the form of repossessions of homes and then re-selling these homes to recoup the losses. When homeowners fail to pay their home mortgage loans, the lender will take over the homes and sell them in order to get the debts redeemed. The value of the homes usually exceeds the debt owed. This means that the lender may undersell the homes and still recover the debt owed. When this happens, the buyer will record substantial gain.

Check on sites like Property Radar and you will access an online database of hundreds of thousands of listings of discount properties nationwide (with many in California and some in Santa Cruz) and also property foreclosures owned by banks. You will not have issues locating these deals in town since we are here to guide you. We'll give you the expert guidance so that you can find the best deals currently available in the market. That is not all, you stand to know how good values are identified and also kill off hidden costs on deals because they are likely going to hurt you afterwards. We have the experience you need to make the best investment opportunity. Our Concierge Services is second to none and we will make sure that you are not left in the dark especially when you have to bring your investment plans into reality. We will be glad if you allow us serve you with experienced investment ideas as you opt for bank-owned "REO" foreclosed homes in Santa Cruz.


Dec. 3, 2018

Substantial Increase in Santa Cruz Home Loan Limits!

The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019.  In the county of Santa Cruz, the 2019 maximum conforming loan limit for one-unit properties will be $726,525, an increase from  $679,650 in 2018. 


Baseline limit


The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  Earlier today, FHFA published its third quarter 2018 House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.  According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 6.9 percent, on average, between the third quarters of 2017 and 2018.  Therefore, the baseline maximum conforming loan limit in 2019 will increase by the same percentage. 


High-cost area limits


For areas (like Santa Cruz) in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit.  HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit.  Median home values generally increased in high-cost areas in 2018, driving up the maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas (such as Santa Cruz) will be $726,525 — or 150 percent of $484,350. 


Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.  In these areas, the baseline loan limit will be $726,525 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.


The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.2 trillion in funding for the U.S. mortgage markets and financial institutions.


Rates for mortgages in conforming range are normally about 0.25% better than High Balance mortgage rates. Both conforming and high balance loans (compared to Jumbo Loans) are regularly easer to qualify for, more forgiving if borrowers do something they should not (for example cash deposits or acquiring new debt) and usually carry less restrictions on property compared to Jumbo loans.


Here is a quick comparison along with the breakdowns for the surrounding counties. Please feel free to reach out to our Santa Cruz Home Loan Advisor for any specific questions.  These new increases home home loan limits will help many buyers of Santa Cruz Real Estate achieve their dream of home ownership.


Surrounding counties new 2019 Limits:


Santa Clara, San Benito counties:


$484,350 Conforming

$726,525 High Balance


Monterey County:


$484,350 Conforming

$652,050 High Balance



Dec. 2, 2018

6 Reasons Why You Should Buy Santa Cruz Real Estate in December

December is a great time to buy real estate in Santa Cruz! The holiday season is a good timing for the purchase of a well priced property, because you'll often find motivated sellers this time of year.  After all, if the seller weren't motivated to sell, why else would they have their home on the market when it's cold, wet, and dark outside?  Here are six reasons why December is a great time to buy a home in Santa Cruz:

1.   Most people who shop for homes don’t usually remain active during the period because of major distractions like holiday decorating, visiting family, and parties. The weather too is not usually inviting at that period and home buyers prefer staying at home to transacting real estate business. Competition from other buyers is definitely at a low point for the year!

2.   Home sellers who couldn’t sell earlier in the year are getting tired of having their homes on the market.  The fact that the homes are still available shows that they really, really want them to sell, otherwise they'd probably pull their homes off the market and try later in the new year.  If you're looking to find a motivated seller, look for folks who still have their homes for sale in December!

3.   Real estate agents are less busy during the holidays and nothing will stop them from giving you quality service. These agents have little work to do at this period and they will be very solicitous, even if you want to submit a lowball offer. No agent would turn down an investor that is willing to buy Santa Cruz real estate in December.

4.     Interest rates in December tend to be lower than at other times of the year, because demand for money is lower.  Every little bit helps!

5.     Lenders might decide to vary qualification for loans next year and you may not be able to meet up with next loan specification. This December could be the best time you have to perfect your real estate investment.

6.     Lenders, appraisers escrow companies - everyone has less business in December.  You may find that your transaction goes more quickly and smoothly this month because people have more time to work on your transaction.

Use this holiday to perfect a bargained house and don’t allow anything to stop you from placing your offers.

Posted in Home Buyers
Dec. 2, 2018

Three Bitter Truths about Renting a Home in Santa Cruz

If you continue to rent apartment or home in Santa Cruz, you will end up losing more money - a lot of it. And it's not so much that you lose money - it's that you fail to add to your net worth.  Consider these three bitter truths about renting a home in Santa Cruz.

1.     You are making yourself responsible for another owner's mortgage loan. Santa Cruz real estate has a strong history of price appreciation - which you gain nothing from as a tenant. Appreciation relates to the increase in the value of an asset or property and it is the landlord that will enjoy this property appreciation. Over the past five years while you're been renting, landlords have increased their net worth by, literally, trillions of dollars.  Why are you missing out?

2.     Unlike home owners, renters cannot freeze their monthly housing expenses. Most homeowners lock in 30-year mortgage rates; their housing payment will rise only slightly over the years. You might want to check the cost of a Santa Cruz rental today in relation to what it was ten years ago if you want to have a clear picture. Today in Santa Cruz, will have to fork out about $2,500-$3500 for a two-bedroom condo/apartment/home whereas the cost was about half that in 2008. As time goes by, owners pay less for their housing than renters do.  A lot less.

3.     Unless you're living in an apartment building, which few people do in Santa Cruz, you have a lot of housing insecurity.  The owner of the home you're renting could decide to hit you with a big rent increase any time your lease expires - or worse, you could just be kicked out when the landlord wants to sell or move a family member in. 

Renting in Santa Cruz means you are setting yourself up for a lifetime of high housing costs and low net worth. The facts are that homeowners have a net worth that's about 37 times greater than renters.  There are many other documented benefits of homeownership, and I encourage you to do your own research on the subject.  The evidence is clear:  home ownership is richly rewarding on many levels.

Posted in Home Buyers
Nov. 26, 2018

Purchase or Refinance and Renovate in Santa Cruz with the VA Renovation Loan

With Santa Cruz Lending Group P/B Mason McDuffie Mortgage, veterans can buy, refinance, and renovate under one, zero-down* loan program. With the VA Renovation Loan Program, you can include the total renovation cost for improvements in addition to the purchase price or refinance of the house!


Renovation funds can be used to:


-        Make home improvements or repairs

-        Remodel an old kitchen or bathroom

-        Replace worn carpet/flooring, remove wallpaper and paint

-        Add energy efficient windows or update HVAC systems


Please note: Remodeling that includes major structural repairs may require additional cash reserves. Maximum work schedule is 6 months.


*100% financing up to VA county loan limits, maximum loan amount $1,500,000. Minimum FICO score requirements apply.


Please contact Victor Romero @ Santa Cruz Lending for more information on this and other Santa Cruz home lloan programs.

Nov. 11, 2018

How to Sell Your Santa Cruz Home for More Money

You’ve probably heard it a million times, but one of the best ways to get the best price for any Santa Cruz house you intend to sell is to ensure you do a proper home inspection and perform any outstanding repairs before running ads online, or erecting your FOR SALE signpost.

Santa Cruz home buyers do not like to stress themselves and would be more willing to commit to a house that doesn’t have major flaws, a home that would pass an inspection with flying colors. Why put up an uninspected house for sale when you’re just setting it up to fail the buyer's inspection? Uncovering necessary repairs and carrying them out before selling is very important in today's market.

The speed of home sales can be boosted by as much as 30% by simply inspecting a home and repairing the significant problems.  

Dan Steward, president of Pillar To Post, North America’s largest home inspection service said, “It’s cheaper to fix a house than to negotiate the price down. It’s been suggested that for every $1 of identified repairs, the buyer would be looking for double that in price reduction.” This means that spending as much as $4000 to repair all the broken doors and windows is cheaper than lowering the value of your home by $8000 just because your buyers would be doing the repairs themselves.

Listed below are ten of the most common repairs that need fixing in a houses in Santa Cruz:

1. Faulty surface grading and drainage: This could cause water to seep into the basement or crawlspace, and make a mess of your home. No buyer would want such a house with hidden lakes.

2. Faulty electrical wiring. This may include little or no electrical service, inadequate protection for overload and very dangerous wiring connections (often done by amateurs). Who wants to be electrocuted?

3. Damaged roofs: No prospective home owner wants to live in a house where raindrops would keep sinking into.

4. Heating systems: Defects like malfunctioning controls, blocked chimneys and dangerous exhaust venting. 

5. Poor overall maintenance of the house including peeling or blistered painted surfaces, crumbling masonry, makeshift plumbing and broken fixtures and appliances.

6. Structurally related problems like damage to components like foundation walls, rafters, floor jousters and window and door headers.

7. Defective plumbing which may include old and faulty piping materials, faulty fixtures and waste lines.

8. Exterior defects including inadequate weather stripping or caulking.

9. Poor ventilation resulting from many homeowners "over-sealing" their homes, resulting in a build-up of moisture interiorly. This can lead to rotting (and suffocation).

10. Miscellaneous components may need minor cosmetic adjustments like repainting or application of wallpapers.

A thorough inspection of your Santa Cruz home coupled with making necessary improvements saves you a lot of time and makes it easier for prospective buyers to make up their minds about your home. 


Posted in Home Owners
Nov. 9, 2018

Non-Qualified Mortgages in Santa Cruz

Good news everyone!  Santa Cruz Lenders are now starting to offer “non-qualified” mortgages (non-QM) in to borrowers whose financial and/or property profiles fall outside conventional loan guidelines.  "Conventional loans" are those which are designed to be sold to Fannie Mae and Freddie Mac, and they must meet guidelines set out by those entities to be eligible for purchase by them.  

Why is that good news?  In a nutshell, it means that it's easier for some Santa Cruz buyers to get into a reasonably-priced mortgage if their financial profile puts them "outside the box."  These kinds of loans are great for people who are, for example, self-employed, investors, and others who may be asset rich but "cash poor."

How a Loan is Considered a “Qualified Mortgage”

Generally speaking, a loan is a qualified mortgage if:

A)    Points and fees are less than or equal to 3% of the loan amount (for loan amounts less than $100K, higher percentage thresholds are allowed)

B)     There are no risky features like negative amortization, interest-only, or balloon loans

C)     The maximum loan term is less than or equal to 30 years

D)    The borrower debt-to-income ratio is 43% or less. Any loan that is eligible for purchase, guarantee or insurance by Fannie Mae or Freddie Mac, VA, USDA or FHA is a qualified mortgage even if the debt-to-income ratio is higher than 43%

The majority of loans fall under the typical “qualifying” loans. Programs like Conventional, FHA, VA, and USDA do a good job of qualifying borrowers with a range of incomes, credit scores, and down payments.

What are Non-Qualifying mortgages?

Lenders however also offer “non-QM” loans to borrowers whose situation doesn’t fall under the “Qualified Mortgage”.

The phrase “qualifying mortgage” is a recent since the standard was implemented in 2014 by the Consumer Financial Protection Bureau (CFPB) as an industry safeguard for both lenders and borrowers.

Lenders take on greater risk by underwriting and approving non-QM loans, so they require very specific qualification standards to assess the borrower's ability to repay the loan. Specifically, lenders offering non-QM loans must maintain a minimum 5% stake in that loan for the life of the loan rather than selling the loan entirely as is typically the case with Qualified mortgages.

Non-QM loans allow borrowers to finance a variety of property types with flexible loan terms not typical to the conventional loan market.

Sample Non-Qualified Loans

Some specialty non-QM mortgages are as follows:

1)     Jumbo Loan: One type of non-QM loan is jumbo financing. The loan limit for conforming is typically $453,000. High balance exceptions exist for the higher-cost real estate areas like Santa Cruz, Santa Clara, San Benito and Monterey counties. “High balance” loans in these areas may go as high as $679,650 with the exception of Monterey county which is $615,000 for conventional, FHA and VA products. “Jumbo” loans are any loan amounts exceeding these thresholds.

2)     10% down jumbo loan (with no mortgage insurance!)

3)     Unlimited financed properties allowed for investors

4)     Asset depletion and pledged assets for qualification

You might be asking yourself - what is "asset depletion" and "pledged assets" for qualifying?  The non-QM loan program is designed to help borrowers who have low or no reported income but have substantial assets. The program allows the lender to use the assets as qualifying income based on a formula. The assets must be liquid and such examples are large retirement accounts or investment accounts.

You should know that these loans may also carry shorter term loans or be hybrid ARMs (adjustable rate mortgages), which are loans that are fixed for 5-10 years and variable afterwards. There are, however, also regular 30 years fixed loans. Rates are normally 2% -3% higher than market rates and costs (origination fees, etc.) are normally twice as much as with conventional loans.

As both a direct lender and a mortgage broker, Santa Cruz Lending uniquely positioned themselves to offer a loan program for every need. Give Victor Romero a call at (831) 214-2172 or email at with any questions or to set up a free pre qualification or conversation regarding such programs.