Another financial item to consider is your property taxes. Understanding your Ohio property taxes and the options you may have allows you to make intelligent financial choices. If you don't understand how much you have to pay, when or how to pay it, or how to budget appropriately, Ohio property taxes can get out of hand and put both your investment and your place to live at risk.

When you owe more than the Ohio property is worth, it is called being upside down.

There are two ways to pay your Ohio property taxes: You can pay them out of an impound account, or you can pay them directly when they are due. Ohio lenders sometimes require borrowers to open an impound account to prepay taxes and insurance. Let's take a closer look at paying your taxes via this option.

How Much Can You Borrow?

Typically, renters allot 25 to 30 percent of their income to pay Ohio taxes. If they are paying a higher percentage, their landlords generally don't care, just as long as the rent is paid every month.

That is not the case with Ohio mortgage lenders. They will make sure that your Ohio mortgage is no greater than what you can reasonably afford. For example, if they are willing to offer you an Ohio mortgage for $110,000 and the home you want costs $130,000, you will have to make up the difference by coming up with another $20,000 for the down payment.

Ten or fifteen years ago, most Ohio lenders used the gross annual income formula to determine Ohio mortgage amounts. If you made $30,000 a year, you could get a mortgage loan of $60,000. Today, lenders who still use that formula—and they are mostly small, hometown institutions—allow two and one half or even three times gross annual income.

There is also the income-to-housing-costs formula. In this qualification procedure, the lender computes anticipated housing expenses and factors these into the equation as they determine the size of the loan they'll offer. These expenses include Ohio mortgage payment, real-estate taxes, fire and catastrophe insurance, and Ohio mortgage insurance, if any. To qualify with many Ohio lenders, your total monthly figure for housing expenses must not exceed 28 percent of your gross monthly income. Some Ohio lenders will go slightly higher. FHA loans will not go above 29 percent of your monthly income. TABLE 3.4 lists the 29 percent ratio for different annual and monthly incomes.

To qualify with most Ohio lenders, your total monthly payment for housing expenses and long-term debts must not exceed 33 to 36 percent of your gross monthly income.

Another criterion is the formula that determines the ratio of income to long-term debt payments. Rather than monthly housing costs alone, here all of the Ohio borrower's long-term (ten months or more) debt payments are calculated. Included are car payments, large outstanding charge account balances, child support, and college loans.

As you work the numbers to see how much you can probably afford, keep in mind that an Ohio mortgage lender is not concerned with the fact that you may need a new car or are planning to return to school for graduate work or that you have no furniture to fill the home you buy. Ohio mortgage lenders are going to look at your current financial situation to ensure that their investment is protected. If you anticipate having large expenses in the near future, you will have to decide how much of your income you can really commit to Ohio housing.

For more information about Ohio property taxes, Ohio mortgages, or Ohio home refinancing visit http://www.ohio-mortgage-services.com