Last Updated on June 9, 2017 by Taylor Welshe
With its diverse landscapes ranging from stunning waterfalls to the Great Smoky Mountains, residents of Tennessee enjoy the majestic outdoors year-round. They also remain entertained, what with the state offering numerous activities, exceptional music, and different sports. Its beautiful cities, including Nashville, Knoxville, and Chattanoga, are beloved by locals, and at the same time, attract home buyers. (Source: Livability.com)
The low cost of living in the state, which the lower prices of real estate greatly influences, also makes it even more appealing to those who wish to make the huge step to becoming home owners. (Source: Sperling’s Best Places)
The value of homes in the state
Home buyers planning to invest on a property in The Volunteer State will be happy to know that real estate here costs less than many other places in the country. Compared with the national median home value of $195,300, values of home in the state average just at $138,400. (Source: Zillow)
Much thanks to the lower housing prices, home ownership rating has gone up to 66.5%. (Source: U. S. Bureau of Census)
One thing to keep in mind is that price and value still depends on the classification of the residential property. For instance, single-family homes remain the least expensive, with an average value of $133,514.58. This is followed by condominiums, having a property value average of $138,218.71, and then townhomes, with an average value of $139,663.60. PUD homes are the most expensive at $151,529.76.
Home loan lending
Like everywhere else in the United States, home loans are the primary way to finance the purchase of a house. Called mortgages or mortgage loans, these services come in two main forms, based on how the lenders apply interest rate. There are the fixed-rate and the adjustable-rate (also known as variable-rate) mortgages.
Home buyers should take as much time as possible when planning such a major purchase, seeing as it’s one of the largest financial responsibilities they can ever have. Before taking out a housing loan, they should first establish their current and foreseeable income. It’s also crucial to determine specific housing requirements, particularly the length of time they intend to stay in the same house. Other critical factors include capability to make a down payment, as well as credit score rating.
Fixed-rate mortgages and rate average
Most borrowers opt for fixed-rate mortgages, especially those that run for a 30-year term (length of time the lender gives them to repay the loan). There are plenty of reasons behind its popularity, but arguably the biggest is the protection it gives against interest rate hikes. Because the interest rate won’t change regardless of how the market performs, consumers can easily predict how much they would have to pay every month, and they aren’t at risk of seeing potentially exorbitant charges on their bills.
Fixed-rate mortgages are ideal for home buyers who want to live in the same residence for a long period of time. In TN, these loans have an average interest rate of 4.22%.
Adjustable-rate mortgages and their average rates
The main attractive feature of adjustable-rate mortgages (ARMs or variable-rate mortgages) is their initial lower interest rate. The keyword here is “initial,” since this only applies to the first few years of the term, which the borrower and the lender will agree upon. After this period, the interest rate can already adjust, either in a downward or upward manner, although in most cases, it does the latter.
The state’s ARMs have an average interest rate of 2.75%.
Help for borrowers having mortgage difficulties
Consumers who find it difficult to secure a mortgage or make their monthly payments can get help from a number of organizations, such as the Tennessee Housing Development Agency. The agency offers low-rate 30-year fixed-rate housing loans as well as down payment assistance. The USDA Rural Development, on the other hand, implements programs designed to boost the repaying ability of borrowers.
Tennessee Housing Development Agency
USDA Rural Development