From scenic Smoky Mountain properties to the excitement of Nashville to the charm of rural towns, buying a home in Tennessee offers a thoroughgoing range of options to suit any lifestyle.
But before you find your perfect Tennessee home, it’s essential to understand the homebuying process from start to finish.
What's in this article?
In this guide, we’ll walk you through each step of the process so you can confidently proceed.
1. Determine whether you are financially ready
The first step in homebuying is to examine your financial situation closely and determine how much you can afford to spend.
Let’s break down how to gauge your financial readiness.
Review your credit score
Your credit score shows lenders how well you can manage your debts.
Different loan types have varying requirements, but the minimum credit score for a conventional loan is 620. Review your credit reports to check for errors, and pay down your debts to improve your score.
Determine your budget
It’s never too early to talk to a reputable, experienced mortgage lender.
If you provide basic financial information to your lender, they can help you estimate your interest rate, terms and loan amount. You can also use an online mortgage payment calculator. This information will help you understand how much you can comfortably afford.
Estimate your down payment and closing costs
The amount you need for a down payment depends on the type of mortgage you have. Your lender can help determine how much you need to put down on your home.
In addition to your down payment, you should be prepared for closing costs and fees, typically ranging from 2% to 5% of the home’s purchase price.
Ready To Take Your Next Step?
2. Get a loan commitment from a lender
In Tennessee’s competitive market, a loan commitment from a mortgage lender will help you put the strongest offer on the table.
Compass Mortgage offers our distinctive Get Committed® program that allows you to:
- Lock in your interest rate
- Go through most of the steps in the loan process, even before you make an offer on a home
- Stand out against buyers with standard preapprovals
A loan commitment essentially has the power of a cash offer, showing the seller you’re fully approved financially and that your deal isn’t likely to fall through.
3. Find the perfect home
With a loan commitment, you can confidently move forward in your home search.
Tennessee offers buyers a wide range of property options. While some areas have experienced significant price growth, others are more affordable.
Work with an experienced local real estate agent to help you find homes within your budget and to craft the most competitive offer.
4. Make an offer and negotiate
A well-structured offer reflects the current market conditions and helps you stand out as a serious and qualified buyer.
In competitive markets, work closely with your real estate agent to create an offer that contains:
- A fair offer price based on comparable home sales and market demand
- Your loan commitment
- Flexibility on the closing timelines
- Limited contingencies
Negotiating is a standard part of the homebuying process. In a seller’s market, you and your agent must balance your needs with the seller’s.
Be prepared to adjust your offer if necessary, but avoid getting pushed beyond your budget.
5. Schedule a home inspection and appraisal
After your offer is accepted, the next step is to schedule a home inspection and appraisal.
Why home inspections are important
Home inspectors evaluate the property’s condition and protect your future investment.
Inspections are critical in Tennessee due to factors like humidity, defective foundations and the potential for termite damage.
The inspector will check the following areas of the home:
- Foundation and overall structural integrity
- Roof and gutters
- Plumbing and electrical systems
- HVAC systems
- Damage from pests or termites
- Imperfections related to moisture or mold
If the home inspection reveals significant concerns, you can negotiate with the seller or even decide to walk away from the purchase.
Purpose of the appraisal process
Lenders require home appraisals to confirm the property’s market value and ensure they are not lending more than the home is worth.
The appraiser, a licensed professional hired by your lender, evaluates:
- Comparable home sales
- Property features and conditions
- Local market trends
The loan can proceed as planned if the appraisal meets or exceeds your purchase price. You may need to negotiate with the seller if the appraisal is lower than your purchase price. Some lenders offer appraisal gap coverage.
6. Secure your mortgage loan
You can finalize your mortgage loan once the home inspection and appraisal processes are complete.
If you have a Get Committed® loan commitment from Compass Mortgage, the only conditions remaining are those related to the property (such as a favorable inspection and appraisal) you plan to purchase.
We can close your loan in as little as 15 days if there have not been any major changes to your financial situation.
7. Prepare for the closing process
With your mortgage loan secured, you can now prepare for closing day!
To make sure there are no surprises, preparation for closing day involves:
- Reviewing your Closing Disclosure, a document given to you three days before closing that outlines the exact details of your loan
- Working with a title company to complete the title search
- Securing a homeowner’s insurance policy
- Completing a final walk-through of the home
- Gathering the required documents, including a driver’s license (or some other form of identification) and certified funds for your down payment and closing costs
8. Close on your new home
The closing day typically occurs at the title company’s office with your real estate agent, the seller (or their representative) and a closing agent present.
On closing day, you will:
- Review and sign your loan documents
- Pay your closing costs and down payment
- Receive documents confirming your ownership, including the deed and title insurance policy
Once these steps are completed, the property will officially be yours!
Get Committed® to Buying a Home in Tennessee with Compass Mortgage
Ready to begin your homebuying journey in Tennessee? Start with a Get Committed®loan commitment from Compass Mortgage so you can focus on finding the right home in the best area.
Apply with Compass Mortgage now to lock in your rate and set yourself up for success!