Welcome to Ask Clark, a column designed to answer your financial questions, by money expert Clark Howard.
Can I Ask My Credit Union To Purchase My Mortgage?
Mark from Michigan asks: “Since we purchased our home in 2012, our mortgage has been held by no less than five different banks. The problem is not that my mortgage is being sold but that smaller banks are being gobbled up by bigger banks. For me, the issue is the irritation of having to switch account numbers and other information on such a frequent basis.
“I don’t really want to refinance with my credit union as we’ve only been in our house for five years and we have a pretty good rate. Is there a possibility of asking my credit union to purchase my mortgage so that I have everything in the same place?”
Also, where are things headed in the financial industry? Will we eventually have just one super, bloated, ultra monster megabank in the United States?”
Clark’s Take on Whether a Credit Union Is Going To Buy Your Mortgage
Clark says: No, the credit union is not going to buy your mortgage out from whichever bank has been gobbled up.
Clark feels that refinancing through the credit union really is your only recourse to solve the gobbling-bank problem — but he says it might just be worth it.
“You would have to do a refi with your credit union, and you could consider doing a 5/1 ARM (adjustable-rate mortgage) with them, where you’d set the rate for the next five years,” says Clark.
With a 5/1 ARM, the interest rate would remain fixed for the first five years of the mortgage. After that, it would convert into an adjustable interest rate. Clark says depending on the real estate market, “it could possibly be a much low enough rate where it could work out for you to refi.”
Clark’s Take on Bank Consolidation
As far as the trend of bank consolidation involving the four “giant monster megabanks” — Wells Fargo, Chase, Citibank and Bank of America — Clark says to look for it to continue.
“There’s a massive wave of consolidation going on where banks are gobbling up banks, trying to bulk up and get some meaningful size to them. And it is likely that sometime by maybe 2025, we’ll have 15 banks that account for 80-90% of all banking activity in the United States. So that is where we’re heading,” he says.
During that time, Clark says to be on the lookout for “good news” letters from banks: “‘Good news! In order to serve you better, we’re merging with blah blah blah!’ Let me tell you,” says Clark, “It’s good news only for their stockholders.”
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