Do you have your heart set on moving to Nashville? If so, figuring out how to buy a house in Nashville is one of the most crucial steps in the entire relocation process. Lucky for you, you can expect to choose from an array of different housing options– and a lot of them. There is a high amount of competition involved when buying a house in Nashville according to Redfin. This is due to being one of the country’s hottest cities for job market growth and having a rapid demand for housing from home buyers like yourself.
While the Nashville housing market is constantly changing, it has made an incredible recovery since the dawn of the pandemic. In fact, the current housing market in Nashville is record-breaking. Of course, there’s no secret as to why so many people want to start living in Nashville, TN. As a start, the remarkably affordable city of Nashville is home to friendly people, amazing attractions, and a bustling country music scene.
Like anything, it’s good to know exactly what you’re getting into beforehand. Nashville currently has increased home prices and overvalued homes that have increased by 31% in the last year. However, Nashville’s home values are expected to decrease by up to 10% in the upcoming year.
We understand that buying a home is no walk in the park– there’s a lot of research, time, and big decisions that go into it. We’ve made this article to walk you through everything you need to know about buying a house in Nashville.
Steps to Buying a Home in Nashville
Is this your first time buying a home in Nashville? Unsure about what to expect with the Nashville real estate market? Along with the market statistics, below is the step-by-step process of buying a house in Nashville.
How Much Can You Afford? How Much Does it Cost to Buy a House in Nashville?
The last thing you want to do is get carried away by the excitement of the thought of a new home. To avoid being in financial distress, later on, you have to develop a budget in order to decide what you can afford to pay.
To start planning your home buying budget, figure out your gross monthly income and current debt payments. Most lenders apply the standard 28/36 rule which suggests that your mortgage payment shouldn’t exceed 28% of your monthly gross income and no more than 36% of your gross income should go toward debt payments. Keep in mind that homeowner’s insurance, property taxes, HOA fees, principal, and interest are included in the mortgage payments.
Multiply your gross monthly income by 28%, to calculate the maximum amount you should pay for housing.
While very useful, the 28/36 rule is only the beginning of the process. You should also be aware of hidden costs that come with homeownership– these add up fast!
How Much House Can You Afford
Understanding the 28/36 golden rule of mortgage lending is key to having a good homebuying experience. Mortgage lenders use the 28/36 rule to measure borrowers' ability to afford their mortgages based on their households' gross monthly income, 1/3 pic.twitter.com/viYEWCHYty
— NMRC (@NMRCNG) June 2, 2021
Depending on the location and home, Nashville HOA fees can be up to $500 a month. The average premium homeowners insurance in Nashville sits at $3,079 per year. You can expect to pay 4.95% for a 30-year fixed loan in Nashville and 4.29% for a 15-year fixed loan. Nashville has a property tax rate of $3.254 per $100 which means that a house valued at $350,000 will come with an annual property tax bill of $2,847.25.
How is the Housing Market in Nashville, TN?
While the housing market is being very competitive, Nashville has the 16th most overpriced housing markets in the U.S. based on analysis from Florida Atlantic University’s College of Business. In fact, Nashville’s rising home prices have caused many houses to be overvalued by up to 50%! Is it a good time to buy a house in Nashville, Tennessee? Well, the good news is that Nashville’s inventory has increased by 47% in the last year, which means that home buyers have more houses to choose from. Nonetheless, the housing market in Nashville has high demand and competition– so once you’ve found the home of your dreams you’ll want to make an offer fast!
What are the Average House Prices in Nashville, TN?
Now, you should have a further understanding of what you can afford to pay for a home while still leaving room for insurance, taxes, and additional expenses. Next, take a look at how you can figure out the cost of your desired home and what is available within your budget.
The median price of houses for sale in Nashville is $465,000– up 17.7% year-over-year. This is slightly above the U.S. median sales price of $428,006 which is up 11% year-over-year. The average sales price for Nashville homes for sale sits at $466,000 whereas the average price per square foot is $284– a 20.3% increase since last year. Houses in Nashville are on the market for a median of 22 days. Are you more interested in a Nashville condo? If so, the median sales price for condos in Nashville is $371,248.
On the flip side, Nashville’s cost of living is about 5% lower than the national average. This means that a family of four living in the area should be making about $84,413 to live the most comfortably according to the Economic Policy Institute.
Curious where to buy a house in Nashville? Home prices greatly vary depending on the type of house it is and what neighborhood it’s in. Below is a list of median home prices of homes for sale in Nashville’s most desirable neighborhoods.
- Bellevue, TN: $472,500 ($251/square foot)
- Madison, TN: $340,001 ($212/square foot)
- Hermitage, TN: $390,000 ($218/square foot)
- East Nashville, TN: $585,000 ($364/square foot)
- Germantown , TN: $590,000 ($537/square foot)
- The Gulch, TN: $750,000 ($791/square foot)
- Green Hills, TN: $1,015,000 ($371/square foot)
- Downtown, TN: $710,000 ($787/square foot)
- Music Row, TN: $421,750 ($632/square foot)
- Midtown, TN: $686,000 ($659/square foot)
Find the Right Mortgage and Get Pre Approved
Once your realistic budget is completed, it’s time to qualify and get pre-approved for a mortgage. To ensure the sellers take your offer seriously and that you are aware of what you can get approved to borrow, the house hunting should come after the pre-approval.
There are several circumstances that should determine what you choose for a lender and mortgage program. Are you a first-time home buyer in Nashville?– if so, an FHA loan may be the way to go. However, these FHA loans are typically more expensive due to the expensive mortgage insurance premiums. If your credit score is good and you’re looking for lower mortgage payments and better savings– a conventional home loan is a great option.
It’s important to know what is needed to buy a house in Nashville, Tennessee. Below, we’ve listed the basic requirements to buy a house in Tennessee and get approved for a mortgage:
- Save for the down payment. Mortgage lenders in Tennessee expect you to pay 20% of the purchase price for a down payment– about $50,000. If you have a government-backed loan like FHA, that Tennessee down payment drops to 0% and 3.5%. You must complete a homebuyer education course to be eligible for down payment assistance.
- Meet income and loan requirements. Your monthly housing costs should not exceed 28% of your monthly income.
- Good credit score. 620 is the minimum credit score most lenders require in Tennessee.
- Ability to repay. You should have at least two years of steady work experience in the same field or job.
- Have a good debt-to-income ratio. A mortgage lender wants to see that you keep the amount of debt you owe low in contrast to your income.
Explore Nashville First Buyer Programs
Is it your first time buying a house in Nashville? A first-time homebuyer grant or program in Nashville can make homeownership more affordable and budget-friendly. Here are some of them below:
- Great Choice Home Loan Program. This offers home buyers a 30-year fixed-rate loan option which varies based on market and mortgage lenders.
- Homeownership for the Brave program. This requires zero down payment and is exclusively for veterans and service members or their surviving spouses.
Find a Nashville Real Estate Agent
A real estate agent will help you find the perfect neighborhood for you, show you homes, negotiate, and offer expert guidance on your decisions.
To choose the best Nashville real estate agent, you should first interview them and inform them of your interests and circumstances. They aren’t your best choice until you feel they fully represent you and demonstrate excellent communication.
Go Nashville House Hunting
Once the contract is signed between you and the buyer’s agent, let the most exciting part begin!
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There are many factors that determine the best place to buy a house in Nashville– lot size, style of home, location, schools, size of the property, and so on. Because your dream home is based on your individual interests, you can list all the features you want in your new home. However, you want to keep your budget, priorities, and current and future lifestyle in mind before choosing a property.
Take a look at these guides that help Nashville home buyers determine which is the best place to buy a house!
- The best neighborhoods in Nashville
- Safest neighborhoods in Nashville
- Best Nashville suburbs
- Nashville vs Memphis– which is better?
Submit an Offer!
After you’ve found the ideal home, it’s time to make an offer! This experience can be anxiety-prompting due to the high level of competition.
Your agent will help you to review comparable home sales and find the best possible offers. Additionally, the following competition strategies may be recommended:
- Reducing contingencies
- Starting with your best price
- Making an as-is offer contingent on the home inspection to prevent the seller from stressing over delays or repairs
- Offering a rent-back clause
- Understand the real estate statistics throughout the process. Nashville homes for sale are on the market for 22 days whereas 54% sell over the list price. 23.3% of homes for sale in Nashville experience price drops.
The seller can make a counter offer, accept it as-is, or reject the offer you’ve submitted. Additionally, the seller may request a higher sales price, fewer contingencies, or reduced seller assistance. They may also reject your request of performing repairs or giving the credit you asked for.
As soon as both parties agree and the purchase agreement is signed, consider yourself officially under contract!
Close on your new Nashville home!
There’s much more to get done before you close. You’ll have to perform due diligence based on the agreement such as getting an appraisal and completing the home inspection– all within a time frame. You’ll also have to go through underwriting in order to secure your mortgage.
The closing date will be determined once the financing is good to go and all the contingencies are met. You’ll have the opportunity of doing a final walkthrough of the home prior to signing the paperwork and getting your new home keys.
Congratulations on buying a new home in Nashville! Whether you’re looking for transporting, packing, or downsizing, give our professional moving team at 6th Man Movers a call today at 615-434-8272 for a free moving estimate!