Maintaining old bank accounts for loans?

[jujumbura]

Hello all,

I had heard somewhere that when looking for a loan from a bank, they consider their 'relationships' with me when deciding whether they will and how much money the bank would loan me. The person had told me this includes all checking and saving accounts held with the bank.

The reason I am wondering about this, is because my wife and I are currently thinking about moving all of our checking and savings accounts over from bank X to bank Y( due to bank X no longer being convenient for us ). However, we will also be looking for a home loan in the near future and we may end up going to bank X for the loan when shopping for the best rate.

So, is the the 'relationships' factor true? If so, should we keep the bare minimum in those old bank X accounts to keep them open, or does the 'relationship' depend on how much money you actually have in the accounts?

Thank you much for any advice!

[boosami]

It depends on the bank.

Some banks, especially smaller ones, like to "get to know you" before loaning you money. They want you to have established accounts and do all your banking with them, and use that to get you to move most or all your money to them. That's how they get a lot of their business.

Bigger banks typically care less about this. Sometimes they'll offer a 1/4 point off loans or some other type of discount if you have another account with them at certain minimum balance. Overall, though, they probably don't have as much flexibility with who they loan to because it all has to be approved by some big national office. So if you look like you'll be able to pay back the loan, you will be approved.

I would just ask Bank X if it makes a difference to them. Explain the situation, and ask if it would affect getting a loan with them in the future. Odds are, though, if they are a big national bank it will not make a difference to their lending practices.

[boosami]

On a personal note, I am big on relationship banking. I carry my accounts that need the most attention at the same bank. It's not convenient for all of the accounts, and I could be getting better rates on some elsewhere. However, for me it pays to have a single point of contact in my private banker. I call him direct and he knows me by voice. I can ask him to wire X amount from my main checking account and he'll do it. I don't have to remember any pass phrases or account numbers or anything. Because he knows me, he always tells me about special discounts I could be getting if I were to get an auto loan or something else with them. Otherwise I wouldn't know about those deals.

[kork13]

As mentioned, it depends on the bank. From my (albeit somewhat limited) experience, the "longstanding banking relationship" card is a good haggling chip. Banks do try to keep business, and many times will do alot for you if you have a good working relationship with them, then more or less threaten to take your business elsewhere. From lowering credit card and other loan rates to waiving service fees and getting better service, having longstanding accounts can make a difference. It has for me, and expect it will in the future.

My advice would be to keep it around, at least for now. It leaves open a valuable opportunity to compare mortgage rates, which could potentially save you alot of money.