Nashville Mortgage Rates

Living in Nashville, TN

Nashville, Tennessee — or “Music City” — is known for its downtown nightlife, abundance of entertainment options and thriving culinary scene. Every year, tourists head to Nashville to listen to country music’s biggest stars and visit local attractions like the Country Music Hall of Fame and the Grand Ole Opry.

Moderate weather and a family-friendly environment have also made Nashville a popular place to live — so popular, in fact, that the population in the Nashville-Davidson region grew by 10.9% from April 2010 to July 2018, according to the U.S. Census Bureau. That could be part of the reason Nashville home prices are on the rise. The median sales price for residential homes in the Nashville area was $299,900 in May 2018, and it rose to $318,000 by May 2019.

Housing inventory appears to be increasing in the Nashville area, though. In May 2018, only 6,460 residential homes were available for sale, but that figure climbed to 8,254 in May 2019. This means that, although prices may be on the rise, there is an increasing amount of available houses for new buyers to choose from. The number of days homes remain on the market is also increasing, which could indicate a trend toward a buyer’s market despite high real estate prices. Homes stayed on the market for an average of 32 days in May 2019, compared to 28 days the previous year.

Due to all of these details, this may be an excellent time to purchase a home in Nashville. Prices may be high, but they could continue rising in coming years. More importantly, though, there are more homes to choose from and they are staying on the market longer, giving buyers more opportunity to make the right choice for them.

The rules and costs of buying a home in Nashville

Each state has its own rules that shape how real estate transactions are handled, and some cities tack on additional guidelines. The following details can help you understand what you’ll encounter as you begin searching for a home in Nashville.

What must sellers disclose? Tennessee state law mandates that most sellers of residential real estate complete a full disclosure statement to let potential buyers know about the condition of their property. This statement needs to include a list of amenities the home has, any known defects or malfunctions of the home, any structural or mechanical problems, environmental hazards and more. Failure to disclose mandated items can result in the cancellation of the sales contract and can even serve as the basis for a lawsuit.

How does foreclosure work? For the most part, foreclosures can work one of two ways. They can be handled through the courts in what is known as a judicial foreclosure or they can be handled outside the courts by a designated trustee in what is called a non-judicial foreclosure. The state of Tennessee allows both judicial and non-judicial foreclosures, meaning repossession of your property due to nonpayment can work either way.

How is property divided in divorce? Tennessee is an equitable distribution state, meaning separate property is not considered marital property in the event of divorce. Generally speaking, this means that property that couples cannot agree upon will be divided equitably by the court system, but not necessarily 50/50. The court will consider various factors to determine an equitable split, such as the duration of the marriage, the employability of both partners, future income potential and the tax consequences for each party upon splitting up assets, among other factors.

Does a lawyer need to be present during a home closing? Some states require an attorney to be present in order to execute a home closing. In Tennessee, however, you can use an attorney but you don’t have to. Tennessee is an escrow state, meaning you can work with an escrow agent to complete the home sale and work through all the details that are required.

Taxes

Many states charge a real estate transfer tax for each home sale that takes place. Tennessee is no exception, as each home sale will incur a tax equal to 0.37% per $100 spent — or 37 cents for each $100 of your home’s sale price. For reference, however, note that mortgage lenders are responsible for properly disclosing the exact amount of transfer taxes if they are applicable.

Davidson County, where Nashville is located, reported median property taxes of $1,587 on a home worth $164,700 in 2019, according to Tax-Rates.org. This is one of the higher median tax rates in the country, and it is significantly higher than the median property tax rate of $933 across Tennessee.

Property tax relief is available to certain Tennessee residents who meet eligibility requirements, although the amount of relief depends on the value of their property and the county they live in. Relief is generally available to senior citizens, disabled homeowners, disabled veterans and widowers of disabled veterans who meet income requirements.

You can find more information about property tax exemptions in Tennessee here.

Conforming loan limits

Davidson County, where Nashville is located, has a conforming loan limit of $534,750. This is higher than the conforming loan limit across most of Tennessee, which adheres to the typical conforming loan limit of $484,350 for single-family homes.

Conforming loans are mortgages that follow a strict set of guidelines set forth by Fannie Mae and Freddie Mac, both of which are government-sponsored entities. These guidelines include national conforming loan limits, although these can vary by county within each individual state.

Programs for homebuyers in Nashville

Many states and large metropolitan areas have programs that can help new homebuyers who meet specific guidelines purchase a home. Here are a few programs that can work if you’re buying a home in or around Nashville.

Great Choice Home Loan

This statewide mortgage program allows consumers to qualify for a 30-year, fixed-rate home loan. You can pair this program with down payment assistance that can help with your down payment or closing costs.

Who qualifies:

  • Maximum purchase price of $375,000 applies in Davidson County, along with income limits of $96,000 to $112,000, depending on household size
  • Minimum credit score of 640 applies
  • Must be a first-time homebuyer, although this requirement may be waived for certain members of the military and those purchasing in a targeted area

Great Choice Plus

Great Choice Plus is down payment assistance you can apply for in conjunction with a Great Choice Home Loan. This assistance is offered as a second loan with no payments or interest charges for as long as you live in your property. You do have to repay the loan, however, if you decide to sell, refinance or move from your home.

Who qualifies:

  • Must meet requirements for a Great Choice Home Loan (see above)
  • Must complete a homebuyer education program

Homeownership for the Brave

If you’re an active-duty military member, an honorably discharged veteran or a reservist, or you’re a military spouse, you may qualify for a Great Choice Home Loan with a reduced interest rate. The requirement to be a first-time homebuyer for this program is even waived for those who meet other guidelines. You can borrow up to 100% of your home’s purchase price with a VA-backed loan or 96.5% with FHA or USDA-RD loans using this program, and you can combine it with down payment assistance.

Who qualifies:

  • Active-duty service members, including the National Guard
  • Honorably discharged veterans
  • Reservists with at least 180 days of active duty service
  • Spouses (and surviving spouses) of qualified service members, reservists and veterans

Rate shopping tips

Shopping for a mortgage is just as important as shopping for a home. After all, the interest rate and loan terms you wind up with could affect your finances for decades to come. Consider the following rate shopping tips that can help you save money and time as you search for the best mortgage.

 

Check your credit score

Before you begin shopping for a mortgage, you should know how your credit score looks. After all, your credit score will play a big role in determining the mortgage rates you can qualify for. LendingTree offers a tool that allows you to see your credit score for free.

Contact at least three lenders on the same day

You shouldn’t necessarily go with the first lender you think of. Contact at least three lenders on the same day so you can get a no-obligation rate quote from each and make a true apples-to-apples comparison of their loan offerings, including rates and fees. If you want to do a little less grunt work, you can also compare multiple loan offers in one place through LendingTree.

Give each lender the same information

It’s important to make sure you’re giving each lender the exact same information, especially when it comes to your income and credit score. The details you give them will determine the rate they can offer, so you want to ensure you’re making a realistic comparison.

Add up all the lender fees to confirm the costs

Make sure you also compare lender fees so you know you’re getting a good deal. Lender fees can include origination fees, appraisal fees, credit report fees and other fees charged by each lender when your home closes.

Know when to lock in the rate

Finally, make sure to ask your lender when you should lock in your mortgage rate. Locking in your rate will ensure your interest rate won’t rise if market rates increase while you shop for a home and move toward closing. Rate locks can last from 15 to 120 days, although they usually last somewhere between 30 and 60 days.

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