A Complete Guide For Nashville’s First-Time Home Buyers

June 24,2019 | Posted By Amy Smith in Nashville
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Tried & True Nashville Real Estate Expert

Are you beginning the process of purchasing your first Nashville real estate investment? Finding and securing the home of your dreams is a process with many steps and factors to consider. From the get-go, you’ll want to recruit the help and expertise of a real estate professional who knows the ins and outs of the local Nashville real estate market. For over 15 years, Amy Jackson Smith has worked tirelessly to provide premier real estate services, working with high-profile clients and specializing in buying and selling Nashville luxury homes. However, Amy Jackson Smith also loves working with Nashville’s very own first-time homebuyers. Committed to nothing less than the best, the team here at Amy Jackson Smith Realty has compiled all of the must-know information for first-time buyers in our own backyard. We believe buying a home should be fun--not stressful. Let’s get started!

Why Nashville Real Estate?

According to real estate mogul Barbara Corcoran, Nashville is one of the best markets for first-time homebuyers in the U.S. With the average price of a three-bedroom home at $295,000, not only are Nashville prices affordable for first-time buyers, you can also expect your home’s value to increase with just 10 percent growth in the last year.

You might be wondering why is Nashville such a hot market right now? It’s because Nashville is a small city with the most job opportunities. Since 2016, hiring rates have gone up by over 11 percent, and Nashville ranks at number 3 for attracting career talent. With more of demand yet also more of a supply of entry-level homes, the market is growing at a healthy pace that gives first-time buyers the opportunity to negotiate for the best deal.


3 Top Tips For First-Time Home Buyers

Even though Nashville offers such favorable market conditions along with rising growth and demand, it’s still important for first-time homebuyers in this region to remain competitive and start the process on the right foot. Here are a few surefire ways for securing your Nashville dream home.

Save Up For A Sizable Down Payment: It is always highly encouraged and recommended that first-time home buyers offer at least a 20% down payment for their initial real estate investment. Keep in mind that lenders will accept smaller down payments, and there are many first-time buyer programs that will qualify down payments as low as 3%. However, a smaller down payment will lead to higher long-term costs such as interest and mortgage insurance.

It’s always best to secure financing early on. No matter the size of your down payment, you’ll want to start saving up before seriously looking at your local Nashville listings. We suggest starting a year or more ahead of time by setting aside any work bonuses and/or tax refunds as well as setting up an automatic savings plan.

Get Pre-Qualified + Pre-Approved For Your Mortgage Loan: Getting pre-qualified for a mortgage simply offers an estimate of the amount a lender is willing to loan a first-time buyer based on the state of their finances. After you’ve decided to put an offer on your Nashville dream home, you’ll want to go the extra step of obtaining a pre-approval letter from a lender, which includes a more thorough financial analysis and confirms in writing how much a lender will offer you and under what terms. This will substantiate your offer in the eyes of a seller and give you a competitive edge over other buyers.

Look Into Available Resources For Your Down Payment + Mortgage: As mentioned earlier, offering a higher down payment on a home leads to lower monthly mortgage payments overall. For the lowest possible mortgage rates, first-time home buyers can opt for a 30-year fixed loan. However, if your budget allows for higher monthly payments, you can select a 20-year or 15-year fixed loan. Keep in mind that loans with adjustable rates will guarantee lower payments for the first few years but are more risky loan options in the long-term.

Tennessee Programs For First-Time Home Buyers

Besides low prices for entry-level houses and the market’s projected growth, Nashville (and Tennessee at large) remains committed to accommodating first-time buyers. The Tennessee Housing Development Agency (THDA) offers alternative loan options and other resources to aid buyers in purchasing their first home without breaking the bank.

Some THDA benefits include the following:

  • » Government-backed and conventional loan options
  • » Great Choice mortgage payments that help fund programs for the elderly, people with disabilities, and the homeless
  • » 30-year, fixed interest rate loans
  • » Loans and assistance programs available through lenders across Tennessee

Eligibility requirements for THDA programs:

  • » Must be a Tennessean with a minimum credit score of 640
  • » Must meet income and loan requirements
  • » Must complete homebuyer education course to get down payment assistance
  • » Property must not exceed purchase price limits, which vary by county

Let’s take a closer look at some of the financial resources the THDA offers especially for first-time home buyers!

The Great Choice Home Loan:

  • » Insured by the FHA or USDA-RD
  • » Allows first-time buyers to borrow up to 96.5% of a house’s total price
  • » Lowers down payment to 3.5%
  • » Offers a 30-year fixed-rate
  • » Helps with down payment and closing costs

THDA Homebuyer Education Classes: The THDA provides a network of homeownership counselors that offer classes to first-time buyers looking for their dream home and the best investment. In these targeted courses, first-time buyers learn about the following:

  • » What makes a home right for you
  • » What questions to ask when looking at a home
  • » How to qualify for a home loan
  • » What’s involved in maintaining a home once you’re a homeowner

Keep in mind that homebuyer classes are required if you plan on applying for down payment assistance via the THDA.

Homeownership For The Brave: This is an option available under the Great Choice Home Loan that’s solely available to active-duty military service members--including the National Guard, veterans, and reservists with at least 180 days of active duty. The Homeownership For The Brave offers lower interest rates and as little as 0% for down payments. This loan option is also available to the spouses and widows of qualified service members in Tennessee.

Great Choice Plus: Saving up for a sizable down payment is one of the biggest obstacles first-time buyers face. Upon qualifying for a Great Choice Home Loan and completing a homebuyer education course, first-time Tennessee buyers become eligible for the Great Choice Plus option. This is a zero interest, deferred second mortgage that provides up to 5% of the purchase price for a down payment and closing costs. Keep in mind that you won’t have to repay funds provided through Great Choice Plus unless you sell the house before the mortgage is paid off or refinance your home into a different mortgage.

Are you a first-time buyer in the Nashville-area with additional questions about the home buying process and best practices? Contact Amy Jackson Smith Realty today at (615)-300-1025!