There’s no question about it – the Tennessee housing market is hot right now. Tennessee is slated to add up to a million new residents by 2040, making the demand for housing high. The median home in Nashville rose from $339,000 to $419,900 in 2021, a 22.4% increase in just a year. Prices are expected to continue to rise from a rate of 6% to 10% in 2022. 

Arming yourself with the right mortgage lender can help you secure the home of your dreams, even in a high-demand housing market, and make the process easier. 

Why Tennessee is a Great Place to Buy a Home

There’s a reason why Tennessee’s housing market is so popular right now. Not only is it a beautiful place to relocate to, with attractions like Dollywood and the Great Smoky Mountains, but the average median home price is lower than the national median. 

As of August 2022, the national average home price was just over $350,000, while the average home price in Tennessee was just under $300,000. The lower price is a great draw for those trying to find a more affordable home in a hot market. 

It’s not just housing prices and attractions that are drawing people to Tennessee; unemployment is down, and job growth is up. The average unemployment rate in May 2022 was 3.2%, compared to the national average of 3.6%, and 3.1 million jobs are expected to be added to the Tennessee economy in 2022 in a variety of sectors, from education, office, and administration support, manufacturing, and government. 

With a growing economy and less expensive housing prices, Tennessee is one of the best states to look for a new house and find the right mortgage lender. 

What to Look for in Mortgage Lenders in Tennessee

Once you have decided to move to Tennessee, you’ll need to find the best mortgage lender for you. Trying to find the right mortgage lender is like trying to find a pair of jeans; one size doesn’t fit all, and you will have to do your research to find the one that fits you and your needs.

Finding the right loan and lender can help you save thousands of dollars and help prevent a lot of headaches when purchasing your home. Before you begin to look at lenders, you need to understand what type of loan you want and what your financial situation is, which will help narrow down your choices. 

Consider the following before agreeing to a loan:

• What is Your Situation – What are your needs in a house, and how much can you afford? Use Bankrate’s mortgage estimate calculator to establish a good starting point. When thinking about how much you want to pay, consider any future plans and present financial circumstances. Do you have enough money for a larger down payment, or are you saving for other priorities? All of this will impact your loan amount.
• Loan Options – Understand the lingo of mortgages and loans. You’ll need to decide what type of loan term is best for you, whether it’s a 15-year mortgage or a 30-year mortgage. With a 30-year mortgage, you will tend to have a lower monthly payment but pay more in interest over the life of the loan. Interest rates are important to pay attention to as well. Are you looking for fixed or adjustable? Finally, consider what type of loan you want and if you qualify for any special types of loans.
• Loan Costs and Fees – When comparing mortgage lenders in Tennessee, consider the loan costs and fees. These can affect your monthly payment and overall loan amount. Your lender will provide you with a loan estimate after you apply, which will explain the estimated interest rate, monthly payment, and estimated closing costs. Make sure to ask for as many details as possible so you can make an informed decision about which lender is right for you and your financial budget. 

If you’re not sure where to start, even after looking at some loan options and costs, try talking to a local mortgage lender who can help review your situation and point you in the right direction.

Types of Mortgage Loans 

When researching the best mortgage lenders in Tennessee for you, one of the most important factors to consider is what type of loan you need. Understanding what loan you can get will help you make an informed decision, as the type of loan can influence the terms of your loan. Ask your local mortgage lender for more information if you are unsure what you may qualify for. They will help you to navigate the process. 

Conventional Mortgages – This is the most common type of mortgage loan. In some cases, with a conventional mortgage, your down payment can be as low as 3%. Keep in mind, however, if you have a down payment of less than 20%, you will generally need to buy private mortgage insurance (PMI). PMI is a fee the lender charges for taking on additional risk.

Fixed Rate Mortgages – With a fixed rate mortgage, your monthly payment doesn’t change over the life of the loan, so you have the same interest rate and principal payment. This is helpful for budget planning, but be sure to consider whether this is the right rate type for you, especially if interest rates are high.

Adjustable Rate Mortgages – Unlike a fixed rate mortgage, adjustable rate mortgages have interest rates that change with the market. Generally, adjustable rate mortgages start with a fixed interest rate for a set period of time, and afterward, your interest rate is adjusted based on the market. If the market rate increases, yours will increase and vice versa. 

Government-Backed Loans – There are many different types of government-backed loans. These are insured by a government agency and have specific qualifications. Many of these loans have little to no down payment and can be obtained with lower credit scores. 

• USDA loans – Loans with a zero-down-payment mortgage for those seeking houses in rural areas. The house must be within a qualifying area. 
• FHA Loans – Federal Housing Administration mortgages require a lower down payment, and your credit scores can be lower than traditional loans. 
• VA Loans – VA loans are available through the U.S. Department of Veterans Affairs for any service member, veteran, and their surviving spouses. It requires zero dollars down.

Jumbo Loans – Jumbo loans are for high-valued properties and tend to be harder to qualify for compared to other loans. You will need a high credit score and a lower debt-to-income ratio. Interest rates are similar to conventional loans. 

How to Find The Best Mortgage Lenders in Tennessee

Finding the right mortgage lender in Tennessee for you is easier with online resources and mortgage rates readily available. If you aren’t sure where to start, try asking your current bank or credit union, as they may offer special rates and fees for customers. You can also search online to see top results in your area that will fit your unique needs.

Ask around and talk to friends, coworkers, and family about who they recommend. You’ll get a better idea of how the lender works with customers before committing to them. 

Try to compare at least three mortgage lenders before settling on one to ensure you are selecting the best rates and services. It’s tempting to go with the first one that responds, especially in a competitive market, but the more research you do, the better fit you’re likely to find in the long run.

As you compare mortgage lenders, keep the following in mind:

• Interest Rates – Interest rates change daily, so make sure you have the right lender before you lock into any rate. While you may want to go with the lowest rate possible, there are other factors to consider, such as customer service. After all, you may be working with the lender for years to come. 
• Fees – Mortgage loans come with fees, and it’s important to understand any additional costs you may be responsible for paying. Understanding what you are paying for is important, especially at closing time. 
• Private Mortgage Insurance – If you are not able to put a 20% down payment on the house, many lenders require you to pay for private mortgage insurance. How much you have to pay will depend on the lender and the type of loan you have. 

Questions to Ask a Mortgage Lender

Shopping around for mortgage lenders is not just about interest rates and fees. Selecting the right mortgage lender is just as important as finding the right house, and knowing the right questions to ask can help influence your decision. 

• What are the down payment requirements for the loan?
• How do you communicate with clients? How quickly do you respond?
• How long is the average turnaround time for pre-approval, appraisal, and closing?
• What steps are online, and what are in person?
• Who will be my main point of contact through the process? Will someone take over when the loan goes into underwriting?

The Right Mortgage Lender for You

When looking for the best mortgage lender in Tennessee, consider working with the expert lenders at SouthEast Bank. We’re deeply rooted in Tennessee and offer white-glove services and quick responses. At SouthEast Bank, we work with you to find the right loan for your needs. 

Note: Links to other websites or references to services or applications are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site, service or application. SouthEast Bank does not control the content of these sites, services or applications.

Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.