Your Guide to Buying a Home in Ohio

The Buying Process: A Summary

• In Ohio, real estate purchases are usually completed by an attorney or a representative from a title company. 
• After a contract is signed, there are details that need to be negotiated, such as repairs and upgrades to the property.
• Although you may have been pre-qualified, you’ll have to work with your lender for final mortgage approval.
• Real estate closings generally take place with both parties at the same table. 
• The entire state of Ohio is under the base limits for conforming loans, which is $647,200 for a single-family property.

Buying a Home, Phase 1: Negotiating Repairs and Updates

Once you enter into a contract, you are committed to the purchase. However, there are still some important details to work through before your Ohio purchase is final.

1. First, you must have an offer accepted, which will launch the process for creating a contract. In Ohio, an attorney review will be used. During the review, either party can get out of the deal without penalty until the contract is finalized. 
2. At the same time, you must pay “earnest money,” which is held in escrow. This essentially demonstrates that you fully intend to purchase the home. 
3. The signed contract, once finalized, is sent to the attorney or title company to prepare all work related to changing and transferring the title to new ownership.
4. You will now review and sign off on all disclosures. These are simply statements of known issues with the home, and may include past repairs and needed upgrades. 
5. You can now have inspections completed. In the state of Ohio, a general inspection, as well as mold, pest, and radon inspections could be completed.
6. If there are any issues from the inspections, you can request changes to the contract. You may request a reduction in price, or you could ask the seller to repair the issue before the sale is complete. The seller in turn may offer a negotiated solution, and the two parties will negotiate until a deal is reached or the purchase is called off.
7. As the buyer, you can also request a home warranty. This is simply a policy that covers the cost of appliance repair for a certain period, usually about six months to a full year. 

Phase 2: The Mortgage Process

Although you may have been pre-qualified for a mortgage, there are still some important steps you’ll need to complete to finalize the loan. Phase 2 can take more time than the others, so it’s best to prepare early and start as soon as possible.

1. First, you will have to submit a loan application, either with the help of a lending professional or on your own. 
2. Eventually, you will receive a “good faith estimate,” which is the estimated costs to close the purchase. The lender will make this estimate as accurate as possible, but the final number could be slightly different. (Generally the good faith estimate is extremely close to the final tally.)
3. Before you can finalize the loan, you’ll need to provide a wide variety of documents, including:

• Pay stubs: Around two weeks of paystubs.
• Tax returns: Usually returns for the past two years are requested.
• Bank statements: At least two months of bank statements will be required.
• Loan documents: This should include any of your current debts. 
• Financial disclosures: Anything that impacts your financial situation, such as child support and alimony.
• Explanation on any credit inquiries: Credit inquiries increase the statistical chances of default, so lenders will need information on these inquiries. 
• Information on any large deposits: If there is a large deposit outside of your normal income, the lender may request further information.
• Gift letters: When receiving a gift to be used as a downpayment, the lender will want a “gift letter,” which outlines the details of the gift.
• Repeat or updated information: Lenders want as much information as possible, so they may request additional documents.

4. The lender will eventually render an approval decision. Assuming you are approved, you’ll get a loan commitment letter, which states their willingness to finance your purchase. This decision will come with contingencies, including the need for an appraisal.

5. An appraisal will be ordered by the lender. This ensures that the home being purchases (and acting as collateral for the loan) will have significant value. If the appraisal is low, changes to the purchase price or loan may be requested. 

6. The financing contingency can be removed by sending the loan commitment letter to the seller or seller’s agent.

7. As the buyer, you will need to order homeowners’ insurance and send proof of this insurance to the lending institution.

Phase 2 is usually the longest, and takes the most effort on your part. Therefore, it’s best to start early and gather all your documents as soon as possible. Also, avoid changes to your financial situation, such as new debts or taking a new job, as this may trigger a reset in your mortgage application. 

Phase 3: The Final Closing

Now it’s time to close the deal. You’ll meet with the seller and real estate professionals to finalize the purchase, but first there are a few details to work out.

1. Before the final closing, the attorney will complete a title search. This will ensure that the property is free of ownership complications and the seller has a legal right to transfer the property to a different owner.
2. The final total for your closing costs will be calculated. This will include property taxes, fees, and other expenses related to completing the purchase.
3. You and your agent will complete a final walkthrough to verify the quality of the property. 
4. At the closing table, you and the seller will sign all the documents for finalizing the purchase. 
5. You will pay the remaining funds of the downpayment to the attorney or title company representative.
6. The transaction will be recorded with the appropriate municipality. 
7. You’ll get the keys to the property and can now move into your new Ohio home!

Conforming Loan Limits in Ohio

The limits for conforming loans, which includes a host of mortgages from government groups like the VA, FHA, and USDA, are set by the Federal Housing Finance Agency. This groups determines the limits on a county-by-county bases, with higher-cost areas receiving higher limits. The entire state of Ohio, however, is under the base limits. 

Currently, the conforming limits in the state of Ohio are: 

• Single-family home: $647,200 
• Two-unit (Duplex): $828,700 
• Three-unit property: $1,001,650 
• Four-unit property: $1,244,850

From Cincinnati to Cleveland, from Williams County in the northwest to Gallia County in the south, from Lake Erie to the Ohio River, these are the limits for any loan that uses government-sponsored or supported financing. 

Remember, these are the limits for conforming loans only. If you need financing above these amounts, there are options, including jumbo loans in Ohio. 

Note: Loan limits are changed on a regular basis. Check with a lending professional for current and updated conforming loan limits.

Ohio Downpayment Assistance Programs

Whether you live in Cleveland or Cincinnati, Toledo or near the West Virginia border, you can find downpayment support from a variety of organizations.

Statewide Ohio Programs

If you are looking for downpayment support in Ohio, start your search with the Ohio Housing Finance Agency, commonly referred to as “My Ohio Home.”

OHFA’s Your Choice! Down Payment Assistance
This organization, which is a branch of the state government, has a downpayment program that can deliver as much as 5% of the home’s purchase price. Although support comes as a loan, after seven years this loan can be entirely forgiven as long as you stay in the home and don’t refinance.

Local Programs in the State of Ohio

Many cities and counties have downpayment assistance programs as well. Here are three examples of local support for homebuyers…

Cuyahoga County Downpayment Assistance
The second largest county by population, Cuyahoga County offers residents a downpayment program that can provide up to 17% of the total purchase. That’s $17,000 for every $100,000 in purchase price! While administered through the Neighborhood Housing Services of Greater Cleveland, this program is available all through the county.

Columbus American Dream Downpayment Initiative
The state capital of Columbus offers the American Dream program, which supports local home purchases through downpayments and closing costs. The funds are entirely forgivable if you stay in the property for at least five years, making this a wonderful option for buyers who plan to stay in Columbus.

Dayton Downpayment Assistance
Buyers in Dayton can find support through the HomeOwnership Center and the city government. They offer a program that delivers as much as $10,000 towards the purchase of a property, and support comes as a second loan that has a 0% interest rate.

How to Qualify for Ohio DPA Programs

Numerous homebuyers are eligible for support through these programs, but they come with a variety of eligibility requirements. Most importantly, you’ll need to meet income standards, as they are intended for low- and moderate-income buyers. The Dayton program, for example, has a limit of $67,300 for a four-person family.

You may also need to complete homebuyer-education classes, especially if you are a first-time homebuyer.

Some programs also require that you contribute a small amount of personal cash. Usually this is around $500 to $1,000 of your own savings.

With the local programs, you’ll need to purchase a home within the city or county that offers the support. For example, if using the Columbus American Dream program, you have to purchase in the city limits of Columbus.

While there are restrictions, you can find outstanding support for your purchase. Programs are always changing, so contact our team to learn more about current DPA options in the great state of Ohio.