Columbus, OH Mortgage Rates

Living in Columbus, OH

Ohio’s capital city is in the middle of a boom. According to recent data from the U.S Census Bureau, Columbus experienced one of the country’s largest population increases between 2017 and 2018. Its growth over the past decade outpaces that of other large Midwest cities by far.

Columbus offers residents and visitors a mix of urban landscape, outdoor activities, nightlife and a thriving culinary scene. A lower-than-average unemployment rate and a representation of numerous industries round out the city’s appeal.

The real estate market in Columbus reflects the city’s growth. Realtor.com in April 2019 ranked it as the hottest housing market in the U.S., based on how quickly homes sell and the interest in listings. Affordability is likely a factor in the city’s rise. The median sales price in the Columbus metro area was $220,000 in May 2019, a 7.8% increase over last year.

Even though home prices have risen, low interest rates have helped keep homes affordable, according to Columbus REALTORS. Sellers undoubtedly benefit in the current market. In May, buyers paid close to asking price, dishing out 99.6% of the original list price, on average. And with current inventory levels low — a 1.7 month’s supply — buyers have to move quickly. In May, homes sold in 28 days on average.

The rules and costs of buying a home in Columbus

The process of purchasing a home is detailed and governed by state and city laws. Here’s what you need to know about buying in Columbus.

Home seller and buyer laws

Ohio sellers must complete a residential property disclosure form reporting any conditions that affect the property. The form requires sellers to report on myriad home conditions, including mechanical systems, the structure of the property, the presence of termites and other wood-destroying insects and the existence of hazardous materials.

Sellers may attach additional pages to the document if more space is needed. If the seller does not provide the form before entering a contract, the buyer has the right to withdraw the offer within three days of receiving the disclosure, provided it’s within 30 days of the seller’s acceptance of the offer and before closing.

Should you encounter difficulties paying your mortgage on time, know that Ohio is a judicial foreclosure state, meaning your lender would need to go through the court system to foreclose on your property. This is different from non-judicial foreclosure states that permit a foreclosure process outside of the courts.

Your lender will file a foreclosure complaint against you after three missed payments. If you receive a complaint and summons, do not ignore it. Seek legal help immediately. Save the Dream Ohio provides more information on the foreclosure process, as well as links to free legal aid and other resources.

For homeowners going through a divorce, Ohio is an equitable distribution state, which means marital property (assets acquired during the marriage) is divided among the spouses equitably. The courts typically split the assets equally between the spouses. However, there are cases in which the courts may allocate them equitably, or proportionally, based on numerous factors, including the length of the marriage and the assets and debts of each spouse.

Assets acquired outside of the marriage (separate property) are usually awarded to the spouse to whom they belong.

Ohio law does not specify how debt is to be separated in a divorce, and this is left up to the court on a case-by-case basis. A judge may choose to divide liabilities equally between the spouses, proportionate to each spouse’s income, or may assign it to one spouse or the other.

Buyers in Ohio are not required by law to be represented by an attorney when closing on a home. They can choose to hire an escrow or closing agent, which can be a lawyer, title company or escrow company.

Taxes

Home purchases in Franklin County, where Columbus is located, usually incur a real estate transfer tax. A portion of the tax is a state-mandated conveyance fee of $1 per $1,000 of the property value, while part is a Franklin County conveyance fee of $2 per $1,000 of the sales price and a transfer tax of $0.50 per parcel. Sellers typically pay the transfer fees in their closing costs, but your lender will notify you if you are responsible for paying any taxes as you near closing.

Homeowners who qualify may take advantage of tax relief programs to reduce their ongoing property tax liability. The state’s homestead exemption provides eligible low-income senior citizens, permanently disabled residents and surviving spouses a reduction in the taxable value of their home by up to $25,000. Franklin County offers the owner-occupancy credit, a 2.5% reduction in taxes to eligible homeowners who occupy their home as their only residence.

The median property tax in Franklin County is $2,592 for a home worth $155,300, slightly higher than the median tax for the state of $1,836, according to Tax-Rates.org.

Conforming loan limits

The conforming loan limit in Franklin County is $484,350. Conforming loan limits represent the maximum amount buyers can finance with a conventional mortgage backed by Fannie Mae and Freddie Mac, government-sponsored enterprises that guarantee loans. Buyers who wish to finance a purchase above the conforming loan limit will need to do so with a jumbo loan, which is typically harder to qualify for.

Programs for homebuyers in Columbus

Buyers in Columbus have access to several homebuyer programs. Assistance is available both on the state and city level. In addition to the programs detailed here, find out about more initiatives by visiting the U.S.Department of Housing and Urban Development (HUD).

Ohio Housing Finance Agency (OHFA) homeownership programs

OHFA offers statewide programs to low- and moderate-income buyers, including affordable mortgages, down payment assistance, federal tax credits and loans for borrowers purchasing in specific areas. Programs target both first-time and repeat buyers.

Assistance across the programs includes:

  • 30-year, fixed rate FHA, VA, USDA and conventional loans
  • FHA 203(k) loans for the purchase and rehabilitation of a property
  • Down payment and closing cost assistance for up to 5% of the purchase price in the form of a deferred-payment, forgivable loan
  • Discounted interest rates for veterans, military personnel, police officers, firefighters and borrowers in the medical and education fields
  • Discounted interest rates and down payment assistance for recent college graduates
  • An annual federal tax credit on mortgage interest paid, up to $2,000

Who qualifies:

  • Buyers who meet minimum credit score requirements, which range from 640 to 660, depending on the program
  • Maximum household income for Franklin County ranges between $38,200 and $106,960, depending on family size and program.
  • Maximum purchase price for Franklin County ranges between $317,647 and $388,235, depending on the program
  • Buyers who attend a homebuyer education course
  • Buyers who meet additional requirements, depending on the program

Learn more

American Dream Downpayment Initiative (ADDI) Program

The City of Columbus administers this program, providing down payment and closing cost assistance to low- and moderate-income first-time buyers purchasing in the city.

The assistance — a deferred-payment loan for up to 6% of the home price, a maximum of $5,000 — is forgivable after five years, provided the buyer maintains the property as their only residence. If the home is sold or transferred before five years, the loan is repaid from proceeds of the sale. This assistance may be combined with state Housing Development Assistance Programs (HDAP) sponsored by OHFA.

Who qualifies:

  • First-time buyers (buyers who have not owned within the past three years)
  • Buyers who have lived in Ohio for at least six months and are permanent U.S. residents
  • Buyers who contribute $500 of their own funds toward the home purchase
  • Maximum total debt-to-income ratio is 45%.
  • Household income must be at or below 80% of the area median income (AMI) as established by (HUD). Current program income limits range from $43,700 to $82,400, depending on family size.
  • Buyers who purchase a property located in Columbus
  • Buyers who attend an approved homebuyer education course

Learn more

Homes on the Hill Properties

In this program, Homes on the Hill-Community Development Corporation (HOTH-CDC), a nonprofit agency, sells rehabbed properties to low- and moderate-income households. The organization also provides down payment assistance of up to $15,000 to eligible borrowers.

Who qualifies:

  • Buyers who meet income guidelines: Household income cannot exceed 80% to 120% of AMI, depending on the property. Current program income limits range between $41,650 and $117,850, depending on family size and property.
  • Buyers who attend a homebuyer education workshop
  • Buyers who meet additional program guidelines

Learn more

Rate shopping tips

In your home and mortgage search, be proactive in getting the best interest rate on your loan. Just a small increase or decrease in your rate can mean a difference of thousands of dollars over the life of your loan. Here are some tips to help you get the best rate available.

Contact at least three lenders on the same day

Since interest rates fluctuate, make sure you apply to lenders on the same day. Otherwise, you may not be able to make apples-to-apples comparisons between your quotes, as the rate you are given one day may not be applicable the next day. Consider using different types of lenders, such as credit unions, national banks or small community banks.

Give each lender the same information

Again, you want to make accurate comparisons among your rate quotes, so be prepared to give complete details, from the home you wish to purchase to your financial information, to all your lenders upfront. If you provide partial information, a low initial rate may increase down the road.

Add up all the lender fees to confirm the costs

In addition to the interest rate for each quote you receive, you’ll need to compare the annual percentage rate (APR), which will give you a better idea of the total cost of financing for each loan. Also, consider appraisal and credit report fees, which aren’t always included in the APR. Understanding all the costs and fees involved in homebuying will also help you to avoid a sticker-shock reaction later in the process.

Know when to lock in the rate

To avoid having your own preferred interest rate rise along with interest rates in general, you can lock it in for a certain period of time, typically around 30 days. If the deadline passes, you may be able to file for a rate-lock extension. What if rates go down after you lock yours in? Some lenders may offer a float-down provision that allows you to adjust your rate if that happens.

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