Financing Your Nashville Home Purchase
Mortgage rates as well as home values in Nashville, TN are more affordable now than they were in previous years - home sales prices in Tennessee are actually lower than home prices in most states. If you are not currently a homeowner, this is an great time to consider buying. Before you even begin to start your search to buy a home in Nashville, you need to think through your financing options and determine whether or not you can truly afford investing in a home purchase.
Know What Homeownership Costs
As you begin your search to buy a home in Nashville, you may come across the monthly payments that are advertised online. Keep in mind that this amount probably is reflecting just the amount that is going towards the principal balance of the mortgage. When you buy a home in Nashville (or anywhere else for that matter), you will also be responsible for additional costs such as property taxes and homeowner's insurance. Actually, many mortgage lenders require their borrowers make monthly payments for property taxes and home insurance premiums as a part of their mortgage payments, and the lender then deposits the money into an escrow account in order to pay for the property tax and homeowners insurance themselves. It is important to remember these additional costs when figuring out the highest home price you can afford.
You also need to consider how much your monthly utility bills will increase once you buy a home. If you are currently living in an apartment, keep in mind that utility bills for apartment rentals are much lower than what a homeowner pays. Thus, if you buy a home in Nashville, you will be responsible for 100 percent of your utility bills. Get a clear idea of how much they will cost before you buy.
Fixed Rate Mortgage or ARMs?
Most lenders in Nashville offer a fixed rate or an adjustable rate mortgage. A fixed rate mortgage has one mortgage rate for the entire length of the loan, while an adjustable rate, or ARM, has a changing interest rate. Typically, the ARM has a lower rate at the beginning of the loan, but it can, and often will, increase over time, so those who intend to stay in their mortgage for the long term typically choose a fixed rate mortgage, while those who need the lower rates at the outset of the loan will opt for the ARM.
Consider Nashville's Mortgage Interest Rates
Your mortgage interest rate is the another consideration to make when determining whether or not you are ready to finance a home purchase in Nashville. Nashville mortgage rates are lower now than they were in previous years, which makes buying a home more affordable for you. However, keep in mind that the cost of obtaining a mortgage to finance your home purchase will be affected by your credit rating, the size of your down payment, the duration of your mortgage, and the type of mortgage you purchase.
At end of 2012 and the beginning of 2013, Nashville mortgage rates on a 30-year fixed loan has been as low as 3.32 percent, which is just slightly higher than the state average of 3.25 percent. Rates on 15-year loans are an astonishing 2.59 percent. This time last year, the rate on a 30-year fixed rate loan was 4.125 percent, with 15-year loans offering 3.5 percent. ARMs are almost always lower, with the opening rate on a 30-year ARM in Nashville of 2.48 percent.
While no one predict exactly what Nashville mortgage rates will do in the future, it seems there isn't too much wiggle room for more drops, making it an good time to buy a home in Nashville. With that said, homebuyers still should to do their research to avoid financial headaches in the future.