Tennessee Mortgage Market Snapshot (2025)
Key metrics for Tennessee homeowners evaluating a refinance. Sources: FHFA, NAR, THDA, CoreLogic.
Tennessee's zero income tax and low property tax create one of the lowest total-cost-of-ownership environments in the country — a major driver of in-migration from Illinois, California, and New York. Nashville and its southern suburbs (Brentwood, Franklin, Williamson County) remain the state's highest-cost market after a pandemic-era price surge. Knoxville and Chattanooga are growing from affordability-seekers. The state mortgage recording tax of $0.115 per $100 adds a modest $345–$575 to a typical closing.
Tennessee Tax Profile for Homeowners
Tennessee has no state income tax on wages or salaries. The former "Hall Income Tax" on investment dividends and interest was fully phased out as of January 1, 2021. Tennessee is now entirely income-tax-free for earned income, making it one of the most competitive tax environments in the country for working homeowners. Combined with no state inheritance tax, Tennessee has become a top destination for in-migration from high-tax states like Illinois, California, and New York.
Tennessee's effective property tax rate is approximately 0.67% — well below the national average. On the Nashville metro median of roughly $420,000, annual property taxes run about $2,814. Tennessee's Greenbelt Law provides significant assessment discounts for qualifying agricultural and open-space properties. For standard residential homeowners, Tennessee assesses at 25% of market value (residential assessment ratio), multiplied by the local mill rate. The low assessment ratio keeps bills manageable even as home values have risen dramatically in Nashville, Memphis, Knoxville, and Chattanooga. Tennessee does offer a Tax Relief Program for homeowners who are 65+, disabled, or disabled veterans, providing property tax reimbursements for qualifying individuals.
Tennessee imposes a state deed of trust recording tax ("mortgage tax") of approximately $0.115 per $100 ($1.15 per $1,000) of the indebtedness. On a $400,000 Nashville refinance, this adds $460; on a $300,000 loan, $345. While modest, this should be included in closing cost estimates. County recording fees are additional but nominal.
Attorney Requirements at Closing in Tennessee
Tennessee does not legally require a licensed attorney to conduct a real estate closing. Title companies handle closings in the major metro markets (Nashville, Memphis, Knoxville, Chattanooga). However, in practice, Tennessee has a strong tradition of attorney involvement in real estate transactions, and many lenders — particularly regional banks and credit unions — prefer or require attorney settlement agents for refinance closings.
When attorneys are used in Tennessee closings, fees for a residential refinance typically run $500–$900. Title company settlement fees run $400–$650. Nashville's rapid growth has produced a well-developed title and settlement services industry. In rural Tennessee, attorney involvement remains more common than in the Nashville metro. Ask your lender whether they have a settlement agent preference before assuming a title company or attorney.
Tennessee's mortgage recording tax applies at the county register of deeds. Confirm whether your lender will collect the mortgage tax as a closing cost prepaid item or whether you must bring a separate check. This is a recording-time tax that is non-negotiable and must be paid at or before recording.
Refinance Laws and Mortgage Framework in Tennessee
Tennessee uses the deed of trust as its standard security instrument for residential real estate. Tennessee permits non-judicial foreclosure (power of sale under the deed of trust), making it one of the faster foreclosure states. Tennessee's non-judicial process typically requires publication of notice for three consecutive weeks, with the total timeline from notice to sale running approximately 45–60 days — one of the fastest processes in the country. This gives lenders rapid resolution in default scenarios.
Tennessee provides no statutory right of redemption after a completed non-judicial foreclosure sale. Tennessee is not a community property state. There are no Tennessee-specific constitutional restrictions on cash-out refinancing; standard federal guidelines apply. Tennessee's no-income-tax advantage means all dollar savings from a lower mortgage rate translate directly to after-tax take-home (beyond federal taxes) — making the effective value of refinancing higher in Tennessee than in comparable high-income-tax states.
Tennessee Home Values and Loan Sizing
Tennessee's housing market has been transformed by in-migration, particularly to Nashville. The Nashville metro has become one of the fastest-growing markets in the country, attracting corporate relocations (Oracle, Amazon, AllianceBernstein), country music industry, healthcare (HCA Healthcare, Vanderbilt University Medical Center), and a massive influx of remote workers and retirees from high-cost states. Memphis is an important logistics hub (FedEx World HQ). Knoxville and Chattanooga are growing mid-size markets with outdoor recreation appeal.
| Market | Approx. Median Value | Notes |
|---|---|---|
| Nashville metro (Davidson County) | ~$420,000 | Fastest-growing TN; Oracle/Amazon |
| Williamson County (Nashville suburb) | ~$680,000 | Top schools; luxury Nashville suburb |
| Chattanooga | ~$320,000 | Outdoor recreation; Volkswagen; growing |
| Knoxville | ~$300,000 | UT Knoxville; Tennessee Valley |
| Memphis | ~$225,000 | FedEx HQ; logistics; affordable |
Williamson County (Brentwood, Franklin) is one of the wealthiest counties in the Southeast and often requires jumbo financing for typical purchases. Davidson County (Nashville proper) is near the conforming limit. On a $420,000 Nashville loan, a 0.75% rate reduction saves about $171 per month, clearing $7,000–$9,000 in closing costs in about 4 years.
Refinancing in Tennessee: What Makes It Different
Tennessee does not legally require an attorney to conduct mortgage closings. Title companies can and do handle the full refinance process. However, attorneys are commonly involved in Tennessee real estate transactions, so you may encounter attorney-assisted closings — particularly in smaller markets or when working with local lenders. If an attorney is involved, expect $400–$700 in additional fees.
Tennessee uses deeds of trust as the standard security instrument for home loans. When you refinance, the old deed of trust is released and a new one is recorded in your county. Tennessee imposes a privilege tax (deed of trust recording tax) of $0.115 per $100 (0.115% of the loan balance) under Tennessee Code § 67-4-409. On a $320,000 loan this adds approximately $368 at closing. County recording fees are an additional $12–$25.
Tennessee is one of the few states with no state income tax. The state eliminated its Hall Income Tax on investment income effective 2021, and wages have never been subject to Tennessee income tax. This tax environment is a powerful draw for individuals and businesses relocating from high-tax states, which sustains strong housing demand across Nashville, Knoxville, and Chattanooga.
Quick Example: 1% Rate Drop on a $320,000 Tennessee Loan
At 1% lower on a $320,000 loan, break-even is about 33 months — under 3 years. Tennessee's reasonable closing costs and no recording tax keep break-even timelines competitive.
Closing Costs in Tennessee
| Cost Item | Typical Range | Notes |
|---|---|---|
| Origination fee | ~1% of loan | Negotiable with lender |
| Appraisal | $400–$600 | Required for most refinances |
| Title insurance | ~0.4% of loan | Lender's policy required |
| Recording fee | $12–$25 | Paid to county register of deeds |
| Privilege tax (deed of trust recording tax) | $0.115 per $100 (~0.115% of loan) | On $320,000: ~$368; TCA § 67-4-409 |
| Attorney fee | $400–$700 (optional) | Not legally required; commonly used |
| Estimated total | 1.5%–2.5% of loan | On $320,000: ~$4,800–$8,000 |
Nashville's Growth and Tennessee Refinancing Opportunities
Tennessee's statewide median home value is approximately $350,000, with Nashville metro approaching $460,000, Knoxville at around $320,000, and Memphis at a more affordable $200,000. Nashville and its suburbs have seen some of the strongest home price appreciation in the Southeast over the past decade.
For homeowners who bought 3–5 years ago in the Nashville area, this appreciation has created significant equity — opening several refinancing strategies:
- PMI elimination: If your original down payment was less than 20%, rising values may have pushed your LTV below 80%. Refinancing can eliminate the PMI premium and offset a portion of closing costs immediately.
- FHA to conventional: FHA loans carry lifetime mortgage insurance premiums (MIP). Homeowners with 20%+ equity can refinance into a conventional loan and eliminate MIP entirely — often worth $100–$200/month.
- Cash-out refinancing: Nashville homeowners with substantial equity have used cash-out refinances to fund renovations, additions, or investment properties, particularly in the competitive short-term rental market.
- Rate reduction: With a 1% rate drop on a $320,000 loan, monthly savings of ~$211 result in a break-even at about 33 months — one of the shorter break-even timelines among the states covered here.
Tennessee is a non-community property state. Only the borrowing spouse's financials are used for loan qualification. No spousal signature is required on the mortgage unless both spouses are on title.
Frequently Asked Questions: Refinancing in Tennessee
Does Tennessee require an attorney at mortgage closing?
Tennessee does not legally require a licensed attorney to conduct mortgage closings — title companies can handle refinance closings. However, attorneys are commonly involved in Tennessee real estate transactions. If an attorney is used, expect $400–$700 in additional fees.
Does Tennessee have a state income tax that affects mortgage decisions?
Tennessee eliminated its Hall Income Tax on investment income in 2021 and has never taxed wages. This no-income-tax environment is a major driver of population growth from high-tax states, which sustains strong housing demand. It does not directly affect mortgage refinancing costs.
What are typical refinance closing costs in Tennessee?
Expect 1.5%–2.5% of the loan amount. Key costs include the origination fee (~1%), appraisal ($400–$600), title insurance (~0.4%), and county recording fees ($12–$25). No state mortgage recording tax applies. On $320,000: ~$4,800–$8,000.
How has Nashville's growth affected refinancing opportunities?
Nashville's rapid appreciation means many homeowners who bought 3–5 years ago now have significant equity — sometimes enough to eliminate PMI through refinancing. Growing home values have also made cash-out refinancing popular for home improvements. However, rising values mean appraisals require review if you're near an LTV threshold.
How to Use the Calculator for a Tennessee Loan
The RefinanceUSA calculator returns monthly P&I savings and break-even from your loan balance, current rate, new rate, and total closing costs. For a Tennessee refinance, use these inputs:
Tennessee mortgage note tax: Tennessee charges a mortgage note tax of $0.115 per $100 of the loan amount. On a $340,000 Nashville-area loan, this adds approximately $391 to closing costs. Include this in your total closing cost estimate before entering it in the calculator.
Break-Even Example — Nashville Area, $340,000 Loan
Homeowners planning to stay 5+ years in the Nashville area typically find a 0.875% rate drop worthwhile at this loan size.
P&I vs. total payment: The calculator produces principal-and-interest savings only. Add your monthly property tax escrow (annual bill ÷ 12) and homeowner’s insurance (÷ 12) to estimate your true total payment change. These do not change with refinancing.
For the full refinancing process, see the 10-step refinance guide. To evaluate whether your rate drop justifies the costs, see the 1% refinance rule.
Tennessee Housing Market Trends (2025)
Tennessee's housing market is moderating from its extraordinary 2020–2022 pandemic surge, but values remain well above pre-pandemic levels and the state continues to attract in-migration from higher-tax states (Illinois, California, New York). Tennessee's zero income tax is the single most-cited reason for relocating households, and that driver shows no sign of weakening. Appreciation has slowed from double-digit annual rates to a more sustainable 2–4% range, which is healthy for long-term market stability.
Metro-Level Trends
- Nashville Metro (Nashville / Brentwood / Franklin / Williamson County): The state's premium market and one of the most in-demand mid-sized metros in the country. Oracle moved its global headquarters from Austin to Nashville. Amazon has a major operations hub. Healthcare sector (HCA Healthcare, Vanderbilt University Medical Center) is a top employer. Williamson County (Brentwood, Franklin) consistently sees the state's highest median home prices and tightest inventory.
- Knoxville / Oak Ridge: University of Tennessee and Oak Ridge National Laboratory (one of the Department of Energy's largest research facilities) provide a stable employment base. Growing from affordability-seeking in-migration from Nashville and from Tennessee Valley Authority and defense-related employment. Inventory remains tight relative to demand.
- Chattanooga: Remote-work destination for Atlanta overflow due to proximity (~2 hours) and dramatic affordability advantage. Volkswagen's Chattanooga assembly plant is a major employer. Known for its downtown revitalization and high-speed fiber internet (first US city with citywide gigabit fiber), attracting tech workers.
- Memphis: Most affordable major Tennessee market. FedEx world headquarters, Nike and Amazon distribution hubs, and a large healthcare sector (Baptist Memorial Health Care, Methodist Le Bonheur) anchor employment. More transactional market with investor activity alongside owner-occupant demand.
For refinancers: Tennessee's mortgage recording tax ($0.115 per $100 of debt) is modest — $345 on a $300,000 refinance, $460 on $400,000. Nashville-area homeowners who purchased in 2018–2020 have large equity cushions from the pandemic-era appreciation. Williamson County homeowners may have balances approaching jumbo territory ($766,550+) if they purchased at 2021–2022 prices — verify conforming vs. jumbo pricing for your specific loan amount.
Refinance Rates in Tennessee
Tennessee mortgage rates track the Freddie Mac PMMS national 30-year fixed average closely. The state does not have a separate conforming loan limit; most Nashville, Knoxville, and Memphis properties fall within the standard $766,550 limit (2025). Williamson County (Brentwood, Franklin) is the main exception — luxury properties there routinely require jumbo financing, where rates run 0.25%–0.50% above conforming.
Tennessee Housing Development Agency (THDA)
THDA (thda.org) operates below-market refinance programs for income-qualifying Tennessee homeowners. The Great Choice refinance program offers reduced rates on FHA, VA, and conventional refinances for borrowers meeting income limits (varies by county and household size). Participating lenders are listed on THDA's website. These programs are underused — many Tennessee homeowners are unaware they qualify.
Rate Context by Loan Type
| Loan Type | Rate vs. National Avg. | Tennessee Notes |
|---|---|---|
| 30-yr conventional (conforming) | Tracks PMMS average | Dominant loan type statewide; standard guidelines apply |
| VA IRRRL | Typically 0.25%–0.50% below conventional | Significant VA population at Fort Campbell (Clarksville) and Arnold AFB (Tullahoma) |
| FHA Streamline | Tracks FHA market | No income or appraisal required for Streamline; strong option for post-2020 FHA borrowers |
| Jumbo (>$766,550) | 0.25%–0.50% above conforming | Common in Williamson County; requires 12+ months reserves and full documentation |
For real-time rate comparisons, use the CFPB rate explorer filtered to Tennessee and your loan size. Always get at least three quotes — rate spreads of 0.25%–0.50% between lenders on the same loan are common and worth shopping.
Credit Union Mortgage Lenders in Tennessee
Tennessee credit unions frequently offer lower origination fees and competitive refinance rates compared to national banks, particularly for members with strong credit and established relationships. Membership requirements have expanded — many Tennessee credit unions now offer community or county-based membership open to any resident.
| Credit Union | Region | Membership Notes |
|---|---|---|
| Tennessee Valley Federal Credit Union (TVFCU) | Chattanooga, Hamilton County, SE Tennessee | One of the largest CUs in TN; community membership open to SE Tennessee residents; tvfcu.com |
| ORNL Federal Credit Union | Oak Ridge, Knoxville metro, East Tennessee | Originally for Oak Ridge National Lab employees; now open to Anderson, Roane, Knox, and surrounding county residents; ornlfcu.com |
| Ascend Federal Credit Union | Murfreesboro, Middle Tennessee, Nashville area | Open to Middle Tennessee residents; competitive 30-yr refi rates; ascend.org |
| Volunteer Federal Credit Union | Middle and West Tennessee | Community charter; broad eligibility across TN counties |
| Army Aviation Center FCU | Clarksville / Fort Campbell area | Active duty, retired military and family members at Fort Campbell; strong VA IRRRL expertise |
Credit unions do not publish rate sheets publicly — you must apply or request a pre-qualification to get a rate. Use the break-even calculator first to establish your minimum rate reduction threshold, then collect quotes from at least one credit union and two national lenders before deciding.
Related Guides
- How to Calculate Your Refinance Break-Even Point
- Mortgage Refinance Closing Costs: Every Fee Explained
- How Much Can You Save by Refinancing?
- Cash-Out Refinance Calculator Guide
- How to Compare Refinance Offers Side by Side
- The 10-Step Mortgage Refinance Process
- Refinance Situations: When It Makes Sense
- Mortgage Refinance Glossary
- Refinance Rules by State
- The Best Time to Refinance in 2026
- How to Estimate Your New Mortgage Payment
- Mortgage Refinancing: The Complete Guide
- Refinance Break-Even Calculator
- PMI Removal Calculator
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Sources & References
- Consumer Financial Protection Bureau (CFPB) — Explore Mortgage Rates
- Freddie Mac Primary Mortgage Market Survey (PMMS)
- Federal Housing Finance Agency (FHFA) — Conforming Loan Limits
- IRS Publication 936 — Home Mortgage Interest Deduction
- U.S. Department of Housing and Urban Development (HUD) — FHA Loan Programs