Santa Cruz homeowners in the golden years of their life may be wondering how they can gift their home to their adult children. Doing so is not as cut and dry as just letting them move in as you are aging or after passing on like it was way way back when. No matter the way that you gift a home to an adult heir of your estate, the tax collector will be waiting to collect on their new "fortune." 

The most common way of gifting a child a home is to have children inherit the home after the owner passes on. In some cases, parents are turning their homes into actual gifts before they pass on as they make plans to move to a home more suited home to this stage of their life. In some areas, this is a good plan, but in some locations around the country the gift is considered a type of sale and the property taxes then increase to current levels. 

There are two little-known ways that may be a smarter way of dealing with tax payments when gifting a home. These methods include a parent financing their child purchasing the home from them and/or selling the home at a significant discount. Before jumping in and choosing these methods it is always wise to look at all of the details and how they would pertain to your specific home gifting. In some cases they may be more helpful in others they may cause more headaches. 

"Gifting" a Home to a Child Through Parent Financing

This method can help children to get financing for the purchase of a home when it may be difficult for them to qualify for a mortgage right now. They can also take advantage of purchasing a home through a lower interest rate and helps a parent to benefit...

Purchasing a home in Santa Cruz and the surrounding Santa Cruz County is no budget purchase. Purchasing a home is one of the largest expenses many people will pay for in their lifetime. So it is very easy to see why people want to make sure they are purchasing a home that is the way they want it and expect it. When inventory is low finding that home you have pictured in your dreams may be difficult. In some cases, it might mean that the home is just outside of your budget. So what is a Santa Cruz buyer to do if they can't find a home that they love?

Ask yourself if it is possible to wait a bit

The real estate market is an ever-changing beast all across the world. There is no market that stays in the same conditions continuously. They are always changing whether it is home prices, the amount of available inventory for sale, or what location is most desirable. There is a whole slew of factors that can change how the real estate market conditions are at any given time. If you are unable to find a home that you truly love and want to invest a large amount of money, it may be best to sit down and write out what you will not settle for or let go of when purchasing a new home. It may mean that you might be better off waiting until the number of homes for sale has increased. If you are not in a rush or need to purchase a home in the next few months waiting may be the best option for you.

The good thing is you don't have to wait it out all...

Living near the beaches in Santa Cruz County is a dream come true for many people. Santa Cruz and its surrounding areas have many gorgeous outdoor spaces and the beach areas happen to be the most popular. When you live on or near the beach there are many advantages. Here are some of the top reasons so many people find living near the beach in Santa Cruz desirable. 

The Scenery 

We thought we would get the most obvious reason out of the way first. The most popular reason for living near the beach is to benefit from the stunning scenery right outside your window all the time. There is just nothing quite like looking out your window and enjoying the gorgeous picturesque sights any time you want. There is something so peaceful about taking some time to stop and enjoy it too. 

There is a Laid-Back Culture to the Beach Lifestyle

A majority of beach communities have a laid-back culture around them. There is something about the water that is calming and resets the pace of life just a bit. This brings a relaxed atmosphere that is somewhat stress-reducing. Who doesn't want an easy way to relieve stress right outside their door?

Entertainment at Your Fingertips

There are countless opportunities for outdoor fun at the beach in Santa Cruz. Living near the beaches allows for a plethora of water sports to be enjoyed. If you live close to the Santa Cruz Pier...

When you live in Santa Cruz you instantly fall in love with the natural surroundings and become more aware of living peacefully in the environment. Santa Cruz is full of the most amazing landscape anywhere on the planet. For this reason many of the people that live in Santa Cruz and the local government have had a commitment to being good stewards of the land that we live in to keep it beautiful for several generations to come.

 For this reason purchasing a green home in the Santa Cruz area is highly desirable and many buyers looking for Santa Cruz homes are hoping to find green properties. 

 What constitutes as an eco-friendly green home in Santa Cruz?

 You may have heard several different terms used to describe these type of properties such as earth friendly, eco-friendly, green, energy efficient and so on. When it comes to finding an eco-friendly Santa Cruz home it can mean something different to each person. Many times the classification has to do with the aspect of earth friendly living that is most important to the buyer. Here are some attributes you will find when searching for eco-friendly properties in Santa Cruz:

 Building materials

 Some homes that advertise as eco-friendly are describing the building materials in which the home was built from. This can mean that materials were used from reclaimed and re-purposed items or are from sustainable resources. It could mean that the flooring is bamboo or the...

In the greater Santa Cruz area there are many different 55+ living communities especially in the Caramel by the Sea area. 55+ active retirement communities often advertise their living culture as a dream of being within a community that offers plenty of exciting activities to enjoy with people in the same stage of life. But what is a 55+ community? Should you purchase property in one?

A description of the average 55+ living community

Many times these types of housing communities that focus on adults aged 55 and above may have descriptive phrases included like independent living or active senior living. You may have heard many different names for 55+ communities as well as a long list of attractions offered to residents within the community.

Though they are sometimes mixed up with similar living situations like assisted living they are not medically focused facilities. These communities offer a focus on a specific type of homeowner that is at the age of 55 or above wanting to purchase a home within a community that offers the ability to have community with other people living in the neighborhood and enjoy some planned activities and community amenities with their neighbors.

If you are an adult at the age of 55 or older and are still active in your lifestyle needing little to no assistance with your daily activities this type of residential community can sound very promising and intriguing. Is it a good investment to purchase...

Moving to a brand new location can take some time to acclimate to a new culture and pace in daily life. Sometimes it can even feel lonely until you meet some people that live there and find your new friend group. One of the best ways to feel like you are part of the community is to join a local club. If you are considering a move to Santa Cruz or have just moved here there are some fun clubs available to you. 

Here are Some Santa Cruz Clubs to Join 

Roller Derby

Want to try something new and active? Why not hop on the growing trend of roller derby? There are derby teams of all different skill levels available through Santa Cruz Roller Derby, Santa Cruz Derby Groms, and the Boardwalk Bombshells a women's team that competes in the Women's Flat Track Deby Association. 

Embroidery

If you are of the crafty mindset the embroidery club may be of interest to you. The Stitchers by the Sea meet monthly as a branch of The Embroiderers' Guild of America. They showcase, learn a new technique, and glean knowledge about the craft from each other. 

Surfing

With some of the greatest beaches on the California coast, there is surely a surfing club to join out here. Surfing is actually the largest sport in Santa Cruz County. This is a very good way to meet new people in Santa Cruz. There are clubs available to surfers of all levels including anyone who has never surfed before. Surf School Santa Cruz is...

Most people recognize the Santa Cruz area for its great beaches, iconic boardwalk, attractions, and scenic properties. Recently many young professionals have been moving into the area because of the high quality of living, amazing outdoor activities, great local restaurants and shops, and more. 

The Most Popular Areas of Santa Cruz County for Professionals

City of Santa Cruz

Being the city for which the county has been named it is no big surprise that Santa Cruz is highly desirable to young professionals. Santa Cruz offers a cultural hub to the county right on the coast. It has some of the most amazing beaches, is the spot of the original iconic beach boardwalk, there's plenty of entertainment venues and nightlife, and the small town atmosphere with plenty of friendly residents and community pride is also a big plus. It is also a great place to further education for furthering your career at places like the University of California Santa Cruz.

The city of Santa Cruz has great job opportunities, especially in technology and tourism. There are several large multinational companies located in Santa Cruz and a good amount of tech start-ups as well.

Live Oak

Live Oak is a city that offers a peaceful atmosphere which has been growing in popularity over the last few years. It is a quiet suburb with more affordable housing options as compared to the downtown area of the city of Santa Cruz. It is also just 4 miles away from this area making it highly desirable...

As home values increase and mortgage interest rates are doing so as well many people are looking for affordable ways to purchase their next home. This has many people wondering where the most affordable areas in the desired location happen to be. For those wanting to live in the amazing town of Santa Cruz, this is not an uncommon question.

The factors that go into determining the affordability of a neighborhood can depend on a few different things including median income level, rent-to-income ratios, and home price-to-income ratios. These are the biggest driving factors that impact the cost of living in an area and can help to give fair insight into the quality of life in an area and the actual affordability of properties in that area. A median home price can help someone assess how much they might need to make from their income to afford properties in an area.

Based on the driving factors listed above we have a list of the most affordable neighborhoods to live in Santa Cruz.

Tanner Heights

Tanner Heights has a median home price of $715,691 and a median rent price of $2216. This by the numbers is the most affordable neighborhood to live in in the city of Santa Cruz. Based on an increase in home prices in the neighborhood over the past three years it shows up at number 1 compared to all neighborhoods in Santa Cruz.

Tanner Heights scores average in its public transportation offerings. Some errands can be accomplished by walking giving the area an average walk score as well. Some businesses can be reached from the Tanner Heights neighborhood on foot. Some of the closest businesses to Tanner Heights include Walnut Ave., Café, The ...

If you are looking for a home but do not have a large sum of cash to make a down payment an FHA mortgage program can be beneficial to you. According to the government's latest numbers, FHA loans may be very lucrative for those looking for some help in purchasing a home over the next year.

FHA stands for the Federal Housing Administration and they are the ones that back FHA loans to help a larger number of borrowers with a focus on first-time homebuyers to obtain mortgage loans to purchase homes. An FHA loan gives a borrower a chance to purchase a home by making a lower down payment of 3.5% as long as they have a credit score of 580 or above.

The FHA does not originate or fund the loans directly they work through agency-approved lenders. The FHA does however ensure these lenders against loan default. When you take out an FHA loan to purchase a home you will need to pay mortgage insurance premiums often referred to as MIP to help cover this default insurance.

MIP gets expensive and some mortgage and financial advisors have raised concerns about the monthly cost of mortgage insurance. But the latest FHA balance sheet can help to address insurance problems and may look more favorable for taking out an FHA loan in 2023.

FHA fund according to the numbers

The fiscal year for the FHA ending in September 2022 reported that there was $141.7 billion in cash on hand and the mutual mortgage insurance fund. This number increased by 41.2 billion from just the previous fiscal year. This fund is required to have a 2% raise or ratio. This means that it must maintain 2% of all possible insurance claims at the end of September 2022 the fund had a reserve ratio of 11.11% which is well above the required...

 An assumable mortgage not only provides funding for a home buyer to purchase a home and move into the former seller's house but the opportunity to take over the former homeowner's loan. The buyer has the opportunity to take on the remaining balance of the current mortgage on a home as well as the repayment schedule and interest rate of that mortgage.

As mortgage rates are soaring much higher than anyone expected back in January of this year assumable mortgages are becoming more attractive to buyers that are hoping to find ways to get their interest rates down. For example, if a buyer takes on a mortgage loan originated in 2016 when the average rate was around 4% this could save a hopeful buyer a whopping 3% in interest points.

There is a twist to taking on the current mortgage on a property and that is that assuming the mortgage can only be done through a government-backed mortgage. These are loans including Federal Housing Administration FHA loans, Department of Agriculture USDA loans, and other government-backed loans. And in addition to assuming the home's current mortgage debt, the buyer will be responsible to pay off the difference between the mortgage balance and the home's current fair market value. This may cause a need for a second mortgage on the property.

How to assume an assumable mortgage

For a buyer to assume a current mortgage it requires the approval of the current loan servicer. If the buyer and seller enter into an agreement to assume the mortgage without the lender's knowledge they take a huge risk. If a lender finds out that a new homeowner has taken on the mortgage without...

Prop 19 in California is a tax benefit for certain homeowners. The Act has recently been expanded to be more beneficial to those who qualify for the benefits. 

What is Prop 19?

Prop 19 is the Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This is quite the mouthful so most people refer to the Act as Prop 19. 

This is a property tax benefit that allows a homeowner of a primary residence in the state of California who is over the age of 55, severely disabled, or the victim of wildfire or natural disaster to transfer the primary residence (first home, lived in a majority of the year) taxable value to a new primary residence as long as that home is within the state of California. 

This act allows for transfer regardless of the location or value of the new primary residence home. It can be a home that is newly constructed or purchased as their new principal residence within 2 years of the sale of the first primary residence. 

Recent Prop 19 Expansions that Began in April !, 2021

The tax measure has expanded to be more beneficial for California homeowners needing to utilize the benefit. Prop 19 now allows replacement home purchases anywhere within the state of California. This means that a homeowner can retain a lower property tax bill that they paid on their first home when moving anywhere else in California to find a new or replacement home. 

The benefits also allow a homeowner to purchase a more expensive property. Eligible homeowners could make use of the new expansion rules to purchase a more expensive property. This does not mean that the homeowner's property taxes...

An adjustable-rate mortgage most often known as an ARM has been an alternative mortgage product for some time. Often a majority of buyers will choose a more traditional loan type such as a 30-year fixed-rate mortgage. But since mortgage rates have been significantly climbing just in the past year more and more homebuyers are beginning to look into the possibility of taking out an ARM mortgage.

Home buyers are looking into ways to bring down their housing costs especially when it comes to purchasing a home and their monthly mortgage payment. The reason adjustable-rate mortgages are coming back into play for many potential homebuyers is that they offer a lower interest rate which turns into a lower monthly mortgage payment.

How does an adjustable rate mortgage work?

An adjustable-rate mortgage offers a fixed interest rate for a set period of time at the beginning of the mortgage. This period of a fixed and guaranteed rate can be anything from one year to 10 years. The most common type of adjustable-rate mortgage is a five-year fixed rate at the beginning of the loan life. After this initial guaranteed fixed rate period ends the rate becomes adjustable and will change to the current average mortgage rate at the time.

Depending upon your mortgage contract terms an adjustable rate mortgage can adjust your interest rate once per year or every six months. The fixed-rate portion of an ARM mortgage is almost always lower than the current average fixed-rate mortgage interest rate. The current average fixed rate for adjustable-rate mortgages is 4.6% as compared to the 7% average we are seeing from fixed-rate...

Easier moving can start with thorough preparation. Not only are expecting moms required to handle the chores of prepping the new place on top of packing the old, but they must always be thinking of what’s OK for the baby. One of the first things to do to help is to consult the doctor. Recommendations on avoiding heavy lifting may already be at the forefront of your mind, but medical experts could offer further advice. This also presents an opportunity to gather necessary medical information and documents to have for a new doctor once the move is complete. While stress can’t be completely removed, these suggestions and more like them can help the move be less stressful. For further tips and a handy timeline on moving while pregnant, please see the accompanying resource.

Graphic created by New City Moving.

For more information on living in Santa Cruz, including Santa Cruz real estate please contact us any time. 

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...

Homeowners Insurance is vitally important for every homeowner and as such, it is important for every person who owns a home or plans to own one to know the basics about home insurance. When many of us think about homeowners insurance we think of it as protection to cover damage and loss in our homes with unforeseen acts of nature or emergent accidents.

This being said many of us have a preset list of ideas that we assume would be covered under homeowners insurance. Many homeowners are surprised to find out that there are some things homeowner insurance will not cover. It is wise for every homeowner to make sure they know their policy and exactly what their insurance covers them for.

Five Surprising Things Homeowners Insurance Does Not Cover

Flooding

Since this is most often caused by an accidental pipe burst in a home or through a crazy act of nature many people assume that flooding is automatically covered in their basic homeowner's insurance coverage. When it comes to a burst pipe this type of flooding is covered under homeowners insurance but when it comes to acts of nature most often homeowners insurance is not going to help to restore your home.

Earthquakes

Again another natural disaster that many would assume is automatically covered with homeowners insurance. However, it is best to check your policy as many basic insurance plans do not cover earthquake damage. Homes within areas prone to earthquakes may be able to purchase additional coverage from their homeowner insurance company at a discounted rate and it is well worth adding on to your basic policy.

Mold

Some mold...

You may be ready to buy a home and already narrowed down your options but without enough money for a down payment, you'll have to wait a little bit longer. However, you shouldn't lose hope just yet. There are several options for first-time homebuyers to get help in raising a down payment. Being aware of these options means you can pick the one that suits your needs the best. Here are some of the options you can go for:

Low-down payment mortgages

Lenders have been asking for a 20% down payment in most cases. However, there are several low-down payment options especially if you are buying your first home. They include:

• VA loans. These loans are backed by the Department of Veterans Affairs. You can also go for USDA loans that are backed by the Department of Agriculture. If you qualify for these loans, you will enjoy a 0% down payment option.
• FHA loans. These are backed by the Federal Housing Administration, and they can allow you to pay a 3.5% down payment.
• Conventional loans. There aren't backed by the government but in this option, your down payment can be as low as 3% as long as your credit score is stellar

If you don't have to raise a big down payment it means you can move into your new house faster and start building equity.

State and local down payment assistance

In every state, there are down payment assistance programs usually implemented by employers, foundations, government agencies, and even nonprofits. The assistance will be in the form of forgivable loans, grants or even zero-interest...

When you hear of the possibility of rate hikes by the Federal Reserve, you can take several proactive measures to minimize the effect on your financial situation.

Rising Interest Rates

When the Fed starts pushing up interest rates, you'll see the effects flow through to your credit card debt, mortgage rates, and rates on car loans. If you're struggling to pay your credit card bills each month or you pay your bills but can only swing the minimum payment, even a small rise in interest rates could create a problem. As the rates gradually rise, more of your monthly payment will go toward interest and less toward paying off the principal portion of your balances.

Credit Card Payments

If you're only making minimum payments on your credit cards, start paying more. If you can't come up with the money to increase your payments, start budgeting or tighten your existing budget, cut spending, and pay down credit card debt with the money you save. If you have money sitting in low-interest savings accounts, using that money to reduce your credit card debt and avoid higher interest gives you, in a way, an immediate return on your money.

Home Equity Loan Over a Line of Credit

If you have a home equity line of credit, consider taking out a home equity loan to repay it if interest rates are expected to rise. Since interest rates on home equity lines of credit are tied to the prime rate, if rates rise, so will the interest on your line of credit. Depending on how much you borrowed, this payment could quickly become one you can't afford, and your house is at risk. By replacing the home equity line of credit with a home equity loan, you lock in a lower...

Read the entire article on ADUs here

If you’ve been thinking about starting a vacation rental business, it’s never been a better time to do so. Global News Wire reports that the industry is expected to grow to $11.3 trillion net worth in the next ten years. Confused about where to start? Property in Santa Cruz shares a step-by-step guide to running a vacation rental below!

Do Your Homework

There’s a lot to think about when you invest in real estate. Here are some key factors you need to research before launching your business.

• Pricing and demand: Research what similar properties in your preferred area are charging and the kind of vacation home that is preferred to maximize your chances of beating the competition.
• Business model: From sole ownership and property management to arbitrage or working with a subcontractor - pick the right business model for your needs.
• Business plan: A solid business plan will include your USP, target audience, opportunities for growth, and critical selling strategies.

Factor in Your Costs

Running a rental can be pricey, so you’ll need a clear idea of incoming and outgoing expenses.

• Maintenance:...

Homeownership has long been a sign of success, but comparing renting to buying isn't all that clear-cut. Renting is less capital intensive, and it gives you the freedom to move when you please. Buying a home will help you build equity and wealth. There are many financial implications and lifestyle factors you should consider when you're making the choice of whether to rent or buy. Learn more so you can make the best decision for yourself.

OWNING

Buying a house is a serious step in your life and you need to consider all the problems you may face and review the advantages you get with your own property. There are plenty of reasons to buy or not to buy a house, but let's highlight the key points that should help you understand whether you’re ready to buy your own property. Home equity is the difference in the market value of your home and how much you owe.

Owning a house is, first of all, a huge investment. Even if you’re not pulling your equity loan, there is always a chance to sell your house later for a better price. The imputed rental income that you receive as a homeowner is not taxed. On top of that, you can deduct your mortgage interest and property tax payments from your federal taxable income.

Owning a house gives you real improvement freedom. There is no landlord who says what you can and cannot do while decorating and improving your house. Renovate your property or completely redesign your bath, you can do whatever you want with your own place. This is something worth paying for. Unfortunately, despite the freedom mentioned above, when you take a mortgage for a house, you’re stuck with this particular place for a long time.

As a homeowner, you have a lot of tax benefits,...