Dear Consumer Ed:
I have a mortgage and a checking account with the same bank. The mortgage payments are up- to-date and have never been late. If I decide to change my checking account to another financial institution, can the bank rescind my mortgage loan?
Consumer Ed says:
That depends on the terms of your mortgage agreement. Some loans require the borrower to maintain an account (with a minimum balance) at the lending institution as a condition of the loan. If you have agreed to maintain an account at the bank, and you close it, you could be in default of your obligations under the loan agreement. I would encourage you to contact your Lender to discuss the specifics of your loan requirements. If you are required to maintain a checking account with the financial institution, ask your bank to show you the specific provision in your mortgage contract. Verify whether failure to maintain a checking account alone is sufficient cause for the bank to cancel your mortgage. Discuss whether, given your excellent payment history, the bank would consider amending your mortgage contract to say that you are not required to maintain a checking account with their institution. If your bank will not remove this provision, find out the minimum amount you can keep in the checking account, and withdraw the rest to another bank. Then, as long as you maintain the minimum checking balance with your current bank, you can safely build up your savings elsewhere.
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