One of the biggest cities in the midwest, and the largest city in Ohio, there are many reasons why you would want to move to Columbus! It’s a city that attracts college students and graduates, is named one of the top 10 cities for young professionals, and is among the safest cities for families. Buying a house in Columbus gives you ample opportunities for recreation and entertainment.
What neighborhoods are people looking for and buying houses in Columbus? The population of Columbus is growing rapidly, with Downtown Columbus an active area of millennials and young professionals. Thanks to its low crime rate and top-rated school system, families with children tend to congregate in the Clintonville neighborhood. Then, just south of Downtown, the German Village is a historic community known for some amazing German cuisine.
The state of Ohio has a low cost of living, and despite the thriving economy, Columbus has a cost of living index that is 8% below the national average making it more affordable to live in Columbus than Cincinnati, Akron, or Cleveland.
Whether you’re buying your first home or your fifth, the home buying process is always overwhelming. This is especially true if you’re moving to a new state and trying to find a house while living elsewhere. Keep reading and let us help you learn how to buy a house in Columbus – just follow these steps and you’ll be sleeping in your new home before you know it.
Steps to Buying a House in Columbus
As much as you probably want to dive right in and start looking at houses in Columbus, there are a lot of things you need to take care of before you can buy a home.
Determine How Much House You Can Afford
Even before you start house hunting, it’s a good idea to have an idea of how much house you can afford. Then, when you start looking for your new home, you’ll know what price range to look at and which ones to skip since they’re more than you can afford.
Financial Readiness and Budget
For most people, buying a home is the biggest investment they’ll ever make, so it’s important to ensure you are financially ready. You should start by reviewing your credit score as a score that is too low will keep you from buying a home and poor scores that qualify for a mortgage result in higher interest rates and higher monthly payments.
There are many ways to check your credit these days – one of your credit cards may even offer access to your credit score as a perk. You could also get an estimate of your credit score from sites like CreditKarma (but keep in mind this is not the same score that lenders use.) If your score is on the low side, it may be worthwhile to focus on building your score and improving your finances before you embark on the journey to homeownership.
Next, use a home affordability calculator to see an estimate of the home price you could afford. Experts recommend that your mortgage is no more than 30% of your gross monthly income (total income before taxes and deductions are taken out). Calculators look at your income, debts, where you plan to buy a house, and how much you intend to put toward the down payment.
Some mortgage lenders allow as little as 3% down payment ($6,750 on a $225,000 home) while others require you have 20% for a down payment ($45,000 on a $225,000 home). If you’re not prepared to put money toward the down payment (in addition to closing costs) you may not be ready to buy a home in Columbus.
Running your finances through a calculator may be an eye-opening experience. You may think you can afford more than you actually can after you take into consideration mortgage, property taxes, homeowners insurance, and potential home owner’s association fees.
Real Estate Market in Columbus
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As of January 2022, the median price of homes in Columbus is up 9.5% compared to last year, with a median selling price of $225,000. When you find a home you like, you won’t want to drag your feet as the real estate market in Columbus is currently somewhat competitive. Homes are selling after just 39 days on the market, the number of homes available for sale is lower this year compared to last year, and the average home is selling for 1% over the list price after receiving multiple offers.
How much it costs to buy a house in Columbus in the various neighborhoods:
- Downtown Columbus – $324,500 ($289/square foot)
- German Village – $610,000 ($336/square foot)
- Franklin Park – $596,000 ($181/square foot)
- Southern Orchards – $264,900 ($162/square foot)
- Olde Towne East – $329,900 ($230/square foot)
- Property Taxes in Columbus
An often overlooked homeowners expense is property taxes. How much do Columbus, OH residents pay in property taxes? The average property tax rate is 2.029% per year – which means the typical $225,000 home in Columbus will have a property tax bill of about $4,565 per year.
While the state of Ohio does not enforce homeowners insurance for homeowners, your mortgage lender may require it. Even if you can get a mortgage without homeowners insurance, it’s not recommended! The average cost of homeowners insurance in Ohio is less than the national average of $1,312 per year at about $1,111 per year for a $250,000 dwelling coverage. While no one wants to pay for anything we don’t absolutely have to pay for – homeowners insurance is one of those important things we pay for in hopes of never needing to put in a claim!
Home and Property Maintenance in Columbus
Another expense new homeowners often overlook is the cost of maintaining your home – especially if you’re going from renting an apartment to buying a home. When something breaks in an apartment, you typically contact the landlord or apartment management company to have it fixed. When something breaks or requires replacing in your home, it’s up to you to take care of it. Common home maintenance expenses include:
- Appliances (repair or replacement)
- Furnace (repair or replacement)
- Snow removal
- Lawn maintenance
- Driveway maintenance
Get Preapproved for a Mortgage
After you’re confident you can afford a home, the next step of the home buying process is to get pre-approved for a mortgage. Most sellers won’t bother with house hunters who haven’t received a preapproval, since there is always a chance that someone looking to buy a home can’t get approved for the loan.
Columbus OH First Time Homebuyer Programs
If you’re buying a home for the first time, definitely look into 1st time homebuyer programs designed to make homeownership more affordable. There are several programs in Columbus, including:
- City of Columbus American Dream Downpayment Initiative (ADDI)
- OHFA Homebuyer Program
- Your Choice! Down Payment Assistance
Types of Mortgages
Before applying for a mortgage, decide which type of mortgage makes the most sense for you. Here are the three most common types of mortgages:
- Can be used to buy a primary home, second home, or investment property
- Interest rates are slightly higher than other types of mortgages but borrowing costs tend to be lower overall
- Remove private mortgage insurance (PMI) once you’ve reached 20% equity
- 3% down payment when loan is backed by Freddie Mac or Fannie Mae
- Home seller can contribute to closing costs
- Require FICO score of 620 or higher
- Debt-to-income ratio must be under 43%
- Requires significant documentation to verify income, assets, employment, and source of down payment
FHA-Backed Home Loans
- 3.5% down payment
- FICO scores over 580
- Available to first time home buyers and repeat buyers
- Mandatory mortgage insurance premiums
- Must live in the property you’re buying
- Requires significant documentation to prove eligibility
- 15 or 30 year loan terms with the same interest rate over the life of the loan
- Usually higher interest rates than adjustable-rate mortgages
- Ideal for people who plan to stay in the home at least 5 to 7 years and keep the same monthly payment
How to Get Preapproved for a Mortgage
Going through the pre-approval process with multiple mortgage lenders lets you shop around for the best deal and interest rates. Pre-approval letters are valid for 60 to 90 days.
Once pre-approved, you’ll have a letter to present to sellers of the homes you’re interested in buying, which shows the sellers you’re serious and prepared to buy if the home meets your needs.
- Fill out a mortgage application with the lenders of your choice, including your social security number so a credit check can be run
- Provide documentation of employment, assets, liabilities, income tax returns, and whatever else the lender requests. (It can seem like some lenders request everything but your first-born child!)
- Lender reviews your debt to income ratio, FICO score, income, employment history, credit history, and determines whether you qualify for a mortgage and how much.
If you receive a pre-approval, it will include a loan estimate that outlines the loan amount you qualify for, which type of mortgage, the interest rate, estimated interest and payments, and your estimated closing costs.
How to Choose the Best Real Estate Agent in Columbus
A real estate agent for a home buyer (buyer’s agent) represents your best interests when negotiating a home purchase. They can help you locate suitable homes in your desired neighborhoods and within your budget, and when you find a home you like – they can negotiate with the seller’s real estate agent to get the best deal.
In Ohio, it’s legal for a real estate agent to represent both the seller and buyer in the same real estate transaction – but it’s better to work with an agent who is specifically representing your interests as a buyer. Real estate agents are usually paid by the seller during closing.
Tips to Find the Right Buyer’s Agent
- Get referrals from people you trust
- Check for full-time, licensed real estate agents
- Look for agents with strong ties in the community
- Check the agent’s references from previous clients
If all of the agent’s professional criteria check out, interview the agent personally to see if you like their communication style. You’re going to work with them on one of the most important financial decisions of your life when you’re buying a house in Columbus, so you want to be comfortable with them.
Start House Hunting!
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Finally! All of the preliminary hard work for how to buy a house in Columbus is complete and it’s time to start the fun part: imagining your dream home. Help your real estate agent out by making a list of the features you want in your home, the neighborhood you hope to live in, and a list of wants – such as school district, size of your lot, architecture style of your home, number of bedrooms, etc. Then, divide your list into “nice to have” and “must have”.
Your real estate agent should be familiar with the city and able to recommend neighborhoods based on your list if you’re wondering where to buy a home in Columbus. If you have young children, maybe start with this list of the best preschools in Columbus to help narrow down your location. You can also keep an eye on this list of homes for sale in Columbus.
How to Submit an Offer on a Home
When you find a home that seems to be a good fit, it’s time to make an offer! Your real estate will contact the seller’s real estate agent to make sure they are still accepting offers, get information about the seller or find out if there are other offers on the table, and come back to you to recommend an offer at the listing price, slightly above, or slightly below the listing price. When you’ve decided on your initial offer amount, your agent contacts the seller’s real estate agent and makes your offer.
The sellers can either accept the offer, reject your offer, or make a counter offer. If they counter with a higher amount, you and your real estate agent can discuss the amount and decide whether to accept or attempt to negotiate. Your agent may go back and forth with the sellers agent for several rounds of negotiation including repairs or credits with the seller before a decision is made.
When your offer is accepted, you then proceed to have the home inspected and appraised to make sure there are no hidden problems that would make you want to back out of the transaction or that would make the home ineligible for a home loan. If the inspection and appraisal are successful, it’s time to finalize your mortgage with your lender.
Closing on your New Columbus Home
Several months have passed since you started your journey to buying a house in Columbus by the time you get to the closing date. At the closing, you may receive credits and deductions for things related to the escrow account, heating fuel, and property taxes. You’ll sign a ton of documents, receive your final escrow statement, sign a few checks or money orders – and by the time you leave the closing table, you’ll have keys in your hand to your new home. Congratulations!
When you’re ready to start the relocation process, don’t stress about all of the steps involved with moving! You just went through a lot to get yourself in the door of your new home, do yourself a favor, and call the best Columbus moving company to make your transition as seamless as possible.