Every state sets its own rules for buying a home and its own property tax rates for homeowners. If you’re thinking of buying in Ohio, consider the following:
Home seller and buyer laws
In Ohio, sellers are mandated by law to use a property disclosure form to describe the overall condition of their home and list all known defects and potential hazards. As a buyer, you should review the disclosures carefully: They should, for example, provide you with information about a home’s foundation and walls, zoning issues, possible pest infestations and internal systems, such as those for electricity, plumbing, sewage and water. If a seller in Ohio fails to give you the form before you enter a purchase contract for the property, you’re allowed to rescind the contract.
Ohio is a judicial foreclosure state. This means foreclosures can only proceed when lenders take them to court, following a series of steps to notify the borrower and post public notice of a home’s impending sale. In Ohio, lenders are allowed to pursue a so-called deficiency judgment. This means a lender may be able to take you to court to recoup the difference between the sale of your home and the remaining value of the mortgage. Lenders, however, can only do this within two years after your home was sold.
Ohio is an equitable distribution rather than a community property state, where all assets, including property, and debts acquired during a marriage are split evenly after a divorce. In Ohio, a court will try to ensure marital property is divided fairly, based on factors such as each spouse’s earnings. Any property acquired separately is allowed to stay with that spouse.
Before closing on your new home, you should know Ohio is also an escrow state, where attorneys are not required to be present to close a sale. You have the option of hiring an attorney if you wish, but in Ohio it’s common to use a title company.
When you close on the purchase of your home in Ohio, the seller will be required to pay real estate transfer taxes. The state imposes a mandatory transfer tax of $1 for every $1,000 of the value of the property. You may have to pay a country transfer tax, too; while the tax is not mandatory in Ohio, counties are allowed to collect up to $3 for every $1,000 of home value. Once you’ve identified a home you’d like to buy, your mortgage lender is responsible for properly disclosing the exact amount of transfer taxes due.
When it comes to the amount of property tax it collects, Ohio is about average compared to other states; according to Tax-Rates.org, the states ranks 22nd out of 50 states.
In Ohio, the average tax rate is now 1.36% of a home’s assessed value, which works out to a median annual tax bill of $1,836 based on a home worth $134,600. Still, as with all states, tax rates vary by county in Ohio, which means residents can now expect to pay a rate anywhere between 0.8% and 1.48%, according to Tax-Rates.org.
You may be able to get some relief from property taxes if you are a low-income senior or permanently and totally disabled. The state offers an exemption program that lets homeowners exempt up to $25,000 of the market value of their home from local property taxes; the exemption appears as a credit on the final tax bill. Income limits apply.
Conforming loan limits
Ohio has relatively affordable housing costs. That explains why every county in the state now has the standard conforming loan limit that applies to most of the United States: $484,350 for a single-family home.
The limits are important because they represent the maximum homebuyers can borrow for conforming loans, which are mortgages that meet guidelines and rules set for Fannie Mae and Freddie Mac. These two government-sponsored enterprises work to make mortgages more affordable and less risky; and for consumers who have good credit, conforming loans usually offer the best interest rates.
It’s possible to borrow more than the conforming loan limit in your area, but if you do, you’ll need to ask for a jumbo loan, a type of mortgage that often commands a higher interest rate.