Seller Financing in Cypress Hills, Brooklyn: Homes by Highland Park

Today's bank rate vs. a typical seller-finance rate

When a Cypress Hills owner sells with financing, the owner becomes the lender. Most owners price that loan off what banks charge: homeowners typically ask about 2 percentage points more than the national average 30-year rate, with a 5-year balloon payment, or an extension if both sides agree to one in the contract. The numbers below update every week.

About Cypress Hills

Cypress Hills sits in the northeast corner of Brooklyn, with East New York to the south, Bushwick to the northwest and the Queens line at its eastern end. Its northern edge climbs into Highland Park and the old Ridgewood Reservoir, and Cypress Hills Cemetery and the Evergreens Cemetery form a long green border beyond. Most of the housing went up between the 1890s and the 1920s, and the street grid is still lined with two-story attached houses, with corner buildings holding shops on the ground floor. Few buildings rise above four stories, which keeps the blocks sunny and the scale consistent.

Fulton Street, shaded by the J train structure, and Jamaica Avenue carry the main retail, with groceries, bakeries, hardware stores and small offices. The J connects to Broadway Junction for the A, C and L, and continues west across the Williamsburg Bridge to Lower Manhattan. Because the housing is modest in size and the area sits farther from Manhattan than Bushwick or Bed-Stuy, a two-family house here is still priced at the entry level for Brooklyn. That draws first-time buyers who plan to live in one apartment and rent out the other to help cover the payment.

Getting around: J and Z elevated over Fulton Street and Jamaica Avenue (Norwood Av, Crescent St, Cypress Hills), with the A and C at Euclid Av a short walk south

What you will find for sale

• Attached two-story brick rowhouses from the early 1900s, typically set up as two-family homes with one apartment per floor and a full basement.
• Wood-frame houses with siding, both attached and freestanding, on the side streets between Fulton Street and Atlantic Avenue.
• A number of larger freestanding houses on the sloping blocks closest to Highland Park, some on deeper lots with front lawns.
• Mixed-use corner buildings with a store and two or three apartments above along Fulton Street and Jamaica Avenue, many under or beside the elevated tracks.

Why seller financing fits Cypress Hills

Bank financing in Cypress Hills often hits a wall over the building, not just the buyer. Older frame houses may have had work done without permits, and a storefront building on Fulton Street can get pushed into a commercial loan with a bigger down payment. Many buyers in the area are self-employed or work in jobs where tips, overtime and cash make up a large part of their pay, which banks discount or ignore. Others have solid rent-paying histories but no credit cards or loans, leaving a thin file that automated underwriting rejects before a person ever looks at it.

Owners here often bought decades ago, when prices across eastern Brooklyn were far lower, and now hold their buildings free and clear. Selling for a lump sum can bring a large tax bill in a single year, while receiving payments on a note spreads the gain over time; an accountant can run the numbers. Retired owners and those relocating may like the idea of a steady monthly payment secured by a house they know well. With fewer bank-approved buyers shopping at the city's eastern edge, offering to carry the financing can widen the field of serious offers.

The 5 terms you will negotiate

Every owner-financed deal comes down to five numbers. Here is what each one means, what is typical in New York City right now, and how they work on an illustrative 2-family brick rowhouse in Cypress Hills.

How to buy owner-to-owner in Cypress Hills

1. Find owners open to financing. Start with Cypress Hills properties on the SellerFinanceNYC live map, where every listing is checked against ACRIS deed and mortgage records. Owners who have held a building for decades with no open mortgage are the most likely to carry a note.
2. Offer on all five terms at once. Price, down payment, rate, amortization and balloon trade off against each other. Put them in a short written term sheet so nothing gets lost.
3. Hire a New York real estate attorney. Your attorney drafts or reviews the contract of sale, the promissory note and the mortgage, and confirms the seller has no existing loan with a due-on-sale clause. See our guide to finding an attorney.
4. Do local due diligence. In Cypress Hills, check:
   • Buildings directly on Fulton Street or Jamaica Avenue sit beside the elevated J line; check noise, vibration and window condition, and how they affect what tenants will pay.
   • Many frame houses were altered over the years; compare the actual unit count and any basement apartment against the certificate of occupancy and Buildings Department records.
   • Ask for the HPD violation history, including lead paint and heat complaints, which come up often in pre-1960 rental buildings and must be corrected by the owner.
   • Blocks on the slope below Highland Park have noticeable grade changes; have your inspector look closely at retaining walls, foundation cracks and signs of basement water.
5. Close like a normal sale. The deed transfers to you, you sign the note, and the seller's mortgage is recorded with the City Register. Buy title insurance, and consider a loan servicing company to collect payments and escrow taxes and insurance.
6. Plan the balloon from day one. Use the five years to build a payment record, fix up the building and document income so you can refinance well before the balloon is due.

Questions buyers ask about Cypress Hills