Refinancing in Tennessee: What the Data Tells Us
Tennessee recorded 13,539 refinance originations in 2023, representing about 3.1% of the nation’s total refinance volume of 435,709 loans. With a population of nearly 7 million and a homeownership rate of 67.03%, the state has a significant base of homeowners who may benefit from monitoring refinance opportunities. Here is a data-driven look at what Tennessee’s refinance landscape looks like today and what homeowners should consider before making a move.
How Tennessee Compares to National Averages
Several key metrics set Tennessee apart from the national picture:
- Average loan amount: Tennessee refinance borrowers took out an average of $321,582, well below the national average of $410,429. This aligns with the state’s median home value of $256,800, which is considerably lower than many coastal states.
- Denial rate: Tennessee’s refinance denial rate of 22.86% is notably lower than the national average of 27.87%. This suggests that Tennessee applicants may generally be applying with stronger credit profiles or more favorable loan-to-value ratios, or that the state’s more affordable housing stock makes qualifying somewhat easier.
- Median household income: At $67,097, Tennessee’s median household income means that debt-to-income ratios can still be a factor for borrowers, even with lower average loan amounts.
Overall, the combination of lower home values, smaller loan sizes, and a better-than-average approval rate paints a relatively accessible refinance environment for Tennessee homeowners.
Loan Type Breakdown: Conventional Dominates
The overwhelming majority of Tennessee refinances in 2023 were conventional loans at 87%, followed by FHA loans at 9% and VA loans at 4%. This heavy tilt toward conventional financing typically signals a borrower pool with adequate equity and solid credit scores, since conventional refinances generally require higher credit thresholds and lower loan-to-value ratios than government-backed options.
The relatively modest FHA share of 9% may indicate that many Tennessee homeowners have built enough equity to move beyond FHA financing, or that they originally purchased with conventional loans. For homeowners currently in FHA loans with mortgage insurance premiums, refinancing into a conventional loan could be a worthwhile consideration if their home equity and credit qualify. Use our refinance calculator to explore potential savings.
Top Lenders Active in Tennessee
Based on 2023 HMDA filing data, the most active mortgage lenders in Tennessee by filing volume were:
- Regions Bank – 11,713 filings
- Rocket Mortgage, LLC – 11,528 filings
- Vanderbilt Mortgage and Finance, Inc. – 9,690 filings
- PennyMac Loan Services, LLC – 9,275 filings
- United Wholesale Mortgage, LLC – 7,001 filings
This list reflects a mix of regional banking institutions, national retail lenders, and wholesale channels. Tennessee homeowners generally benefit from shopping multiple lenders to compare rates, fees, and service quality. Even small differences in rate or closing costs can add up significantly over the life of a loan. Visit our best refinance lenders page for more on how to evaluate your options.
Current Rate Environment and What It Means
As of the latest data, the current 30-year fixed mortgage rate sits at 6.38% and the 15-year fixed rate is at 5.75%. For Tennessee homeowners who locked in rates during 2022 or early 2023 when rates briefly exceeded 7%, today’s rates may present a meaningful opportunity to reduce monthly payments.
Conversely, homeowners who secured rates below 5% during 2020 or 2021 will likely find little incentive to refinance for rate savings alone, though cash-out refinancing or term reduction could still make sense depending on individual goals.
Tennessee Refinance Regulations and Closing Costs
Understanding state-specific rules can help Tennessee homeowners plan for the true cost of refinancing:
- Attorney requirement: Tennessee does not require an attorney at closing, which may help keep closing costs lower compared to states that mandate legal representation.
- Recording/indebtedness tax: Tennessee charges an indebtedness tax of $0.115 per $100 of the mortgage amount (0.115%). Importantly, this tax applies only to new indebtedness on a refinance. For a rate-and-term refinance where no additional money is borrowed, this can significantly reduce the tax owed compared to the full loan amount.
- Right of rescission: As with all states, Tennessee borrowers have a 3 business day federal right of rescission after signing refinance documents. This allows homeowners to cancel the transaction without penalty if they change their mind.
- Notable rule: The distinction that Tennessee’s indebtedness tax applies only to new money is particularly beneficial for homeowners doing a straightforward rate-and-term refinance. If you are refinancing your existing balance without cashing out additional equity, your recording tax obligation may be minimal.
Tennessee Housing Programs for Refinancers
The Tennessee Housing Development Agency (THDA) offers Great Choice refinance loans for eligible borrowers. These loans typically feature competitive interest rates and may be worth exploring for homeowners who meet income and property eligibility requirements. THDA programs are designed to make homeownership more affordable across the state, and their refinance options could provide savings beyond what the open market offers. Visit THDA’s website directly for current eligibility criteria and rate information.
A Worked Example for Tennessee Homeowners
Consider a Tennessee homeowner with a $256,800 mortgage (matching the state’s median home value) currently at 7.2% on a 30-year fixed term. Their current monthly principal and interest payment would be approximately $1,743.
If they refinance to today’s 30-year fixed rate of 6.38%, their new monthly payment would drop to roughly $1,603, saving about $140 per month. Assuming total closing costs of approximately $4,000 (keeping in mind Tennessee’s favorable indebtedness tax treatment on rate-and-term refinances), the break-even point would be around 29 months.
If this homeowner plans to stay in the home for several more years beyond that break-even period, the refinance could generate meaningful long-term savings. Use our break-even calculator to determine whether refinancing makes sense for your specific situation.
Tips for Tennessee Homeowners Considering Refinancing
- Check your equity position: With a median home value of $256,800 and potential appreciation since purchase, many Tennessee homeowners may have sufficient equity to qualify for competitive conventional refinance terms without mortgage insurance.
- Shop multiple lenders: Tennessee has a healthy mix of regional banks, national lenders, and wholesale options. Getting at least three to four quotes can help ensure you are getting the best available rate and terms.
- Factor in the indebtedness tax: For rate-and-term refinances, Tennessee’s tax applies only to new money borrowed. This can make refinancing more cost-effective than in states that tax the full loan amount.
- Explore THDA options: If you meet eligibility requirements, the Tennessee Housing Development Agency’s Great Choice refinance program may offer rates that compete with or beat conventional market rates.
- Calculate your break-even point: With current rates at 6.38% for a 30-year term, the math may work in your favor if your existing rate is meaningfully higher. But always run the numbers with closing costs included to find your true break-even timeline.
- Consider a shorter term: At 5.75% for a 15-year fixed loan, homeowners with adequate cash flow might consider shortening their loan term to build equity faster and pay significantly less interest over the life of the loan.
Refinancing is a significant financial decision, and every homeowner’s situation is different. Take the time to gather your current loan details, check today’s rates, and use our refinance calculator to see how the numbers work for your specific circumstances.