Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Dec 29, 2011

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When a lender looks to qualify a potential borrower for a mortgage loan, the relationship that borrower has with another bank is of little importance. Closing a bank account prior to obtaining a mortgage loan should have little to no affect on a borrower’s eligibility.

 

According to Dr. Don Taylor, an adviser for bankrate.com, ending a relationship with a bank “won’t negatively impact [borrowers’] ability to get a mortgage loan when [they] apply for one in the future.” But a borrower needs to make sure their relationship with the bank is closed entirely with no outstanding debt or unfinished transactions. The reason for this is not directly related to the mortgage loan approval process, but rather to ensure a borrower they can have healthy relationships with banks in the future.

 

A company called ChexSystems monitors consumers’ bank relationships much like FICO monitors consumers’ credit scores. If a borrower terminates a relationship with a bank and doesn’t satisfy their outstanding debts or transactions with that bank, ChexSystems may put a red flag on that borrower’s name. In the event that happens, the borrower is essentially blacklisted from doing business with banks, and banks will shut their doors to a blacklisted borrower for up to five years—the amount of time ChexSystems stores an individual’s banking history.

 

The more important factors in determining a borrower’s eligibility rest in a borrower’s credit score, income, and monthly bills.

 

Those three sources are what affect a mortgage loan’s terms the most. A borrower’s credit score is used to determine what kind of interest rate a borrower will obtain. Their income is used to calculate how much total money a bank will lend. Finally, any recurring monthly bills are subtracted from a borrower’s monthly income, and directly affect the amount a bank will allow a borrower to finance.

 

If consumers are interested in seeing how much a lender will qualify them for, they can use this online form to obtain offers from various lending sources.