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End of Car lease just before mortgage

onourwayfellas
Established Member

End of Car lease just before mortgage

Hi all,

Sorry for the redundancy but my question concerns mortgage and car lease so I have posted in both groups. If I need to delete one I am fine with that but heres the deal.

 

Wife current lease ends in April, about the same time we plan to start mortgage applications as the goal is a summer purchase. We are not sure how the end of the Lease affects the mortgage application process so I am here seeking guidance.

 

Would it be best to trade in for a new lease or purchase OR buy out the lease now and convert the lease to a loan. My thought on that is 1. we take advantage of the positive equity she has in the vehicle (2019 Infiniti QX60, residual buy out price $25,995) similar mileage and trim currently selling for 4,000 to 12,000 more. I understand that doesnt equal the amount of equity gained from trading in. 2. if we trade or finance now it gives us at least 4-6 months of good payments to strengthen credit score.

 

OR should we extend the lease (assuming NMAC agrees) but not sure how that reflects on the mortgage process as far as DTI and open accounts.

 

Again, any insight would be greatly appreciated!

3 REPLIES 3
4sallypat
Valued Contributor

Re: End of Car lease just before mortgage

I was in a similar situation.

 

My mortgage broker said to extend the lease month by month until the loan gets funded.

Opening a new loan to own it would be bad.

 

So that's what I did (extended lease) and ended up buying out the lease just after my escrow closed.

 

It was tempting to rake in $10,000 in value if I sold it but I could not find a replacement.

 

IF you don't need the car, then have a dealer buy it out and you pocket the cash but otherwise, mortgage lenders see a lease as a continuous installment loan...

Message 2 of 4
CreditFun
Regular Contributor

Re: End of Car lease just before mortgage

 

Generally, DTI will generally be imputed if you sell or return vehicle, unless you can prove to the underwriters liking that the vehicle is not needed.

 

Keep vehicle until you close.  A new account is not likely going to improve your score.

Message 3 of 4
mike-fico
Valued Member

Re: End of Car lease just before mortgage

We had a lease come due mid way through home construction, about 6 months before closing.  Our loan officer said, if you got to do it, do it just don't get something MORE expensive.

We just ended that lease and rolled it into leasing another vehicle.  The payment was $7 less per month.  I think I dropped 2 points on my mortgage scores but they have come back up.

Message 4 of 4
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