Mortgage Rates Ohio: A Complete Guide To Home Buying
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At $150,000, Ohio’s median home value is one of the lowest in the entire country – this means homes in Ohio are considerably more affordable than in other states. However, the low average home price comes with high buyer demand. Knowing the latest mortgage and refinance rates can help put you at an advantage over other home buyers by making it easier to find the best deals.
This guide covers everything you need to know about current mortgage rates in Ohio. Read on to find the latest mortgage and refinance rates in the state as well as a guide to Ohio’s homebuyer assistance programs.
Home Loan Options In Ohio
You can choose from three loan types to fund your Ohio home. Each of these loans has its unique features and fulfills different needs. Learning the details of each type is important so you can choose which loan best fits your financial condition.
Conventional Home Loan
Most mortgages not backed by government entities are called conventional home loans. These financial products are commonly offered by private mortgage companies, with loan amount limits set by the Federal Housing Finance Agency (FHFA). Loan amount limits for all of Ohio are set at the national standard of $548,250.
Conventional mortgages are further divided into three major loan types, each with benefits and caveats:
Fixed-rate mortgages offer stable interest rates that remain the same for the entire loan. This stability translates into a consistent monthly payment amount, making them popular among long-term financial planners. However, this rate stability has the caveat of a higher mortgage rate than other loan types.
The common 30-year fixed mortgage term provides the most affordable monthly payment amounts. However, you can choose 15-year or 20-year fixed mortgage terms to get lower mortgage rates.
Adjustable-Rate Mortgage (ARM)
The interest and annual percentage rate on adjustable-rate mortgages change annually based on a market index chosen by lenders. This means your monthly payment amount may rise or fall every year throughout the loan’s life. However, ARMs have the benefit of low fixed-rate introductory periods at the start of each loan. Thanks to these introductory rates, adjustable-rate mortgages are good for short-term savings.
An ARM’s introductory period lasts anywhere from 3 to 10 years and is usually stated in its name. For example, a 3/1 ARM features a 3-year introductory period.
You can choose jumbo loans to buy homes priced above FHFA loan amount limits. Jumbo mortgages can exceed loan limits but come with a higher interest and annual percentage rate.
Government-Backed Loan Programs
The United States federal government runs several loan programs to assist homebuyers in certain demographics, like veterans and rural residents.
The three major government loan programs are:
FHA loans: Designed to raise the homeownership rates among homebuyers without good credit, FHA loans feature lenient qualification requirements. However, these loans have lower limits and you need to pay mandatory mortgage insurance premiums.
USDA loans: These loans are made to build rural communities and therefore have strict area restrictions. On the upside, USDA loans feature low mortgage insurance premiums and require zero down payment.
VA loans: To qualify for a VA loan, you must be an active or former military servicemember. VA loans offer a zero-down option if you pay 2.3% of your mortgage as a VA funding fee. If you want to reduce your funding fee requirement, you can put more money down.
Taking a refinance means getting a new loan to pay off your existing mortgage. There are two main types of refinancing, each used to accomplish different things:
Rate and term refinance: This type of refinancing can modify your loan terms.You can adjust the loan’s period by shortening orlengthening it as well as change it from one loan type to another.
Cash-out refinance: Cash-out refinances convert home equity into cash on hand by providing you with a loan larger than your current balance. Then, you can use any money left after paying off the mortgage for other needs.
Compare Mortgage Rates In Ohio
Ohio mortgage rate trends slightly above the national average mortgage rates for most of the past decade. Use the table below for a look at the most current mortgage rates in Ohio. All rate information listed here is taken from America’s top lenders.
Today’s Mortgage Rates In Ohio
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Listed mortgage and refinance rates may change without prior notice. Your actual rates may vary based on your financial condition and other factors.
Enter your financial information into the calculator above this page for a personalized look at your Ohio mortgage interest rates.
First-Time Homebuyer Programs In Ohio
While homes in Ohio are already affordable as-is, you can get even better deals from the state’s homebuyer assistance programs. The Ohio Housing Finance Agency (OHFA) provides mortgages for first-time homebuyers who:
Meet OHFA’s credit score requirements
Satisfy OHFA’s income and purchase price limits
Complete a free homebuyer education course
Passing these requirements allows you to qualify for conventional, VA, FHA, and USDA loans at a lower mortgage rate. You may also qualify for the state’s down payment assistance (DPA) programs.
OHFA Ohio Heroes
The state offers a discounted mortgage interest rate for first responders, medical personnel, and teachers under the Ohio Heroes program.
Ohio Heroes is available for qualified first-time and repeat homebuyers in the state. Like the main OHFA mortgage, you can also combine this loan with available DPA programs.
OHFA YourChoice DPA
The YourChoice program allows you to receive up to 5% of your home’s purchase price in down payment and closing cost assistance. These funds come as a grant that you don’t have to repay, as long as you don’t sell or refinance the home for seven years.
OHFA Grants For Grads
Ohio also offers a 5% down payment assistance grant and discounted rates if you’ve received a university or college degree in the past four years. This grant doesn’t have to be repaid if you stay in Ohio for at least five years after the purchase.
OHFA Mortgage Tax Credit
OHFA borrowers are eligible for a tax credit worth up to 40% of your mortgage interest every year. This allows you to lower your tax bill proportional to your mortgage interest.
Buying A Home In Ohio
Even in a market with affordable homes, missteps in the process can cost you a lot of money. To avoid costly mistakes and boost your chances of getting your dream Ohio home, follow these six steps!
Step 1: Go Through Pre-Approval
First, you need to get your mortgage application pre-approved. Start the mortgage process at a lender, including their credit checks. Once you get pre-approved, you’ll receive a pre-approval letter.
This letter contains key details of your loan like its rate and maximum amount. Your pre-approval letter acts as a budget guide for your home purchase and a sign of financial home buying readiness.
Step 2: Find A Realtor
A good realtor can help secure the best home deals and provide key information on your chosen neighborhood. When interviewing real estate agents, pay close attention to their years of experience and review scores.
Step 3: Start House Hunting
Pick a neighborhood that fits your lifestyle and budget. Search the area’s home listings for the most affordable homes. If none of the available homes fulfill your needs, consider buying the cheapest home there then use the money you saved for home improvements.
Step 4: Make An Offer
Catch the seller’s eye and beat the competition by making an offer above the listed property value. To avoid overpaying, consult with your real estate agent before putting down an offer.
Step 5: Schedule Inspections And Appraisals
Do your due diligence before settling on a closing date. Have inspectors and appraisers examine the home to determine its actual value and find any issues. If the home is overvalued or has property defects, you can still renegotiate a deal with the seller.
Step 6: Finish The Deal
Prepare the money to pay your closing costs and origination fees ready before closing day. Have your realtor present during paperwork signing to answer all your questions before you close the deal.
How To Get Better Ohio Mortgage Rates
Reducing your mortgage rate by a fraction of points may not look like much now, but these savings add up. Over the years, you can end up saving thousands of dollars from the smallest rate reductions.
Follow these tips to drive down your Ohio mortgage rates:
Provide A Larger Down Payment
A larger down payment reduces your total loan balance, which means you owe less money to the lender. Putting more money down also improves your loan-to-value ratio, increasing your likelihood of getting a better interest rate because the lender sees you as a safe borrower.
Take Shorter Loan Terms
You’re more likely to get a better interest rate on shorter loans because lenders take less risk on them. A shorter loan term also means you make fewer monthly payments, reducing your interest payments.
Compare Offers From Multiple Lenders
Mortgage lenders try to get your business by offering lower rates or discounted lender fees. You’ll have many options to choose from! Shopping around may also help you find deals you otherwise wouldn’t have spotted.
Standardized loan estimates make it easier to compare multiple lender offers. Ask for three or four estimates and pick the lender that represents the best value for you.
Additional Rate Reduction Steps
To complement the three tips we covered above, you can also reduce your interest rates by taking these steps:
Improve your credit score.
Work with independent mortgage brokers.
Purchase discount points.
Ohio’s cheap home prices lead to a very competitive market. To increase your likelihood of landing a good home in the state, you need to prepare by learning the home buying process and knowing the latest mortgage rates.
If you’re looking for the best mortgage deals in the Buckeye State, Wesley LLC is here to help. Contact our professional team today for more mortgage resources and advice!