Ohio Mortgage Rates

Living in Ohio

Ohio has only about 11.7 million residents, but it has the seventh largest economy in the U.S. The state that produced the airplane, professional football and 25 astronauts still has an unemployment rate of 4.3%, versus the national average of 3.6. That rate, however, is the lowest since 2001.

The service sector — not manufacturing — now drives three-quarters of Ohio’s economy. That helps explain why home demand remains healthy in service-oriented cities, such as Columbus, the state capital in central Ohio.

Overall, the central Ohio market looks strong. There, demand for housing is continuing to outrun supply, and homes are selling in record time, especially affordable homes under $350,000. Homes most recently sold in an average of 26 days, according to Columbus Realtors Multiple Listing Service. Prices are up, too: In April, the median price of a central Ohio home was $213,600, up 12.4% from the year before.

In some parts of central Ohio, prices are rising even faster. In April, the average sale price for a home in Lancaster, near Columbus, was $148,208, up 22.1% from the year before, according to Ohio REALTORS, the state’s largest professional trade group. In western Ohio, buyers may also need to pay up: The average price in Dayton was $176,501, up 9.4%.

The rules and costs of buying a home in Ohio

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.

Taxes

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.

Programs for homebuyers in Ohio

The Ohio Housing Finance Agency (OHFA) works with lenders to offer a variety of programs for homebuyers and homeowners. The assistance comes in the form of affordable loans, down payment help, renovation loans and homebuyer education. OHFA also offers a mortgage credit certificate that might allow you to receive a federal tax credit for 40% of the mortgage interest you pay each year.

All borrowers who are qualified to receive help from OHFA need to meet certain requirements, which you can see here. In general, expect to see income, purchase price and acreage limits; for most loans, you’ll also need a credit score of 640 or more. For a complete description of what OHFA offers, go to this site.

First-Time Homebuyer Program

OHFA works with lenders to provide low-to-moderate-income, first-time homebuyers with more affordable, 30-year, fixed-rate mortgages that are either conventional loans or government-backed FHA, VA and USDA-RD (Rural Development) loans. To qualify, you must meet OHFA’s general eligibility requirements and be one of the following: a buyer who has not owned a home in the last three years; an honorably discharged veteran; planning to buy in a federally designated target area.

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Your Choice! Down Payment Assistance

This program provides a loan that can be used for a down payment, closing costs or other pre-closing expenses. The help comes in the form of a loan that is either 2.5% or 5% of the home’s purchase price. If you stay in your home at least seven years, the loan is forgiven. Otherwise, if you sell or refinance before then, you’ll need to repay it. If you need more help with down payment and closing costs — and are planning on taking out a conventional loan — the OHFA Advantage program may be able to help.

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Grants for Grads

This program offers affordable mortgages that provide help with down payment costs. To qualify, you must have graduated within the last 48 months with a degree, ranging from an associate to a doctorate or some other post-graduate degree. The degree needs to be from an accredited college or university.

The down payment assistance comes in the form of a loan equal to 2.5% or 5% of the home’s purchase price. To keep the down payment assistance, you need to remain in Ohio for five years. If you sell your home and move out of the state before then, you’ll have to pay back some or all of the loan.

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Ohio Heroes

If you serve the public in some way, you may be eligible for a mortgage that comes with a discounted rate. To qualify, you must meet OHFA’s general eligibility requirements and be a:

  • Veteran, active-duty military member or reserve member (surviving spouses are eligible, too)
  • Police officer, firefighter, volunteer firefighter, EMT or paramedic
  • Physician or nurse
  • Pre-K through high school teacher, administrator or counselor

Learn more

Rate shopping tips

It’s important to shop around to get the mortgage rate that works the best for you; even small, hard-to-notice differences in interest rates and loan terms can means thousands of dollars in additional expense over the life of your loan.

Contact at least three lenders on the same day

Mortgage interest rates fluctuate daily (sometimes more often), so ask for loan quotes from lenders on the same day to make the most accurate comparison. Don’t just focus on large, nationally recognized lenders; consider smaller lenders in your area, too. Closing costs also vary by lender, so this might be a good time to ask about them.

Give each lender the same information

To compare mortgages fairly — and speed up your quote request — make sure to provide lenders the exact same information. This means having the following information readily at hand:

  • The loan amount you’d like
  • How much down payment you can afford
  • The type of loan (e.g., conventional, VA, FHA, jumbo)
  • Loan terms (e.g., a fixed-rate versus adjustable-rate loan)
  • Your FICO credit score
  • The type of property (e.g., condominium, single-family, co-op, multi-unit)
  • The property’s location
  • How the property will used (e.g., primary residence, vacation home, investment property)

Add up all lender fees to confirm the total cost

Lenders provide a list of fees in the loan estimate they’re obligated to give you three days after you submit a loan application; by adding up the line items on the estimate, you’ll be able to better compare the total cost of each loan. Your loan estimate should include information such as your loan amount, interest rate and the amount of principal and interest you’ll pay each month. It will also tell you what you owe for lender origination fees (or underwriting charges), credit report fees, property recording fees and the cost of points if you plan to use them in exchange for a lower interest rate.

Know when to lock in the rate

When you’re ready to place an offer on a home, apply for pre-qualification or preapproval from your lender. This will show you’re serious about buying a home, and it’s also an opportunity to ask for a rate lock. With your mortgage rate locked in (usually for a period of 15 to 120 days), you won’t have to worry if market interest rates move up before you close.

The information in this article is accurate as of the date of publishing.