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My girlfriend is applying for a mortgage, but is unable to get approved for enough because of high payments on her car lease.

These numbers are rounded for convenience, but currently, the payments are 500. If we pay off an extra 2000 up front, the next four months will have a zero dollar payment, which would make the average monthly payment for the rest of the lease 400.

I understand that officially on record with the lease company, her payments will be the same amount, with the payments deferred for four months, but the average monthly payments for the remaining life of the lease will have decreased to 400. We would immediately begin paying 400 instead of deferring the payments, and continue paying that amount for the life of the lease. 0 400 0 800 0 1200 0 1600 500 2000 1000 2400 1500 2800 2000 3200 ...

So my question is, will this have any effect on the mortgage application? Or will they only still see that $500 value, and ignore everything else? If it would not have an affect, where is the cutoff as to what amount would be beneficial?

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I'm impressed. She must have a substantial income to agree to a $500/month car payment. I imagine her income is about 20K per month for that to make sense. What kind of work does she do?

To answer your question, typical lease do not work the way you describe. Paying an extra $2000 will allow you to skip 4 payments (provided the payments were exactly $500) any time in the future. It does not modify the terms of the lease which would include the payment amount. Also one does not receive a fiance charge reduction benefit as with a loan. Essentially you are providing a loan to the leasing company for free.

To be explicit you cannot tell the mortgage company anything as she is applying for the loan, not you. She can tell the mortgage company the new payment is $400, but she would be falsifying the application which is not advisable.

Perhaps the mortgage company is doing her a favor. They are indicating her life is out of control financially. Either she is attempting to purchase way to much home or her consumer debt is out of control. It could be a combination of both.

My first paragraph was written to be "tongue in check" in order to demonstrate absurdity. Without a substantial income and an substantial net worth, a 500/month car payment is simply ridiculous. While it is someone average, when you compare it to the average income (~54K/year) you understand why 78% of US households live paycheck-to-paycheck (are broke), and have no retirement savings.

For your and her sake, please stop giving all your hard earned money to banks.

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    The numbers are rounded for convenience, but I do understand that the lease was a poor financial decision. Also, I've editied the question to clarify that she would be doing the application, and to make it a bit more clear what I'm asking. I do understand that the lease company will tell us we still have a 500 payment that's just due four months from now. Also, I appreciate you taking the time to answer my question!
    – iCodeSometime
    Commented Jan 6, 2017 at 16:00
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    Also, to answer your question, she works for Navy Federal. I understand it may look that way on a credit application, but we both work a lot of overtime, so our lives are by no means out of control. I save ~30% of my paycheck, and she saves ~50% of her paycheck each month, and we have over 20% saved for a down payment. Really our only issue is that we were both irresponsible and got cars far more expensive than we should be paying.
    – iCodeSometime
    Commented Jan 6, 2017 at 16:16
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Note that having the money in your savings/investments may impress the bank as much as, or more than, paying down this commitment. I would not advise rushing into an action that arguably reduces you financial options; it isn't likely to help.

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