Refinance a car before getting a mortgage?

[Anonymous]

Should I refinance my car to a lower interest rate/ payment with the intention of obtaining more purchasing power for a house in Southern California? Our loan mortgage originator has mentioned that she does this with all her clients and with great success (she has a connection with the underwriter). Based on experience, could an auto refi loan negatively affect a mortgage application? I understand there will be a hard inquiry, but doesn't a lower payment mean less Debt-to-Income ratio (better chances of approval)? Should I take her word for it or hold off?

[NC_Mtg_Loaner]

Magic 8-ball says the probability of something like this helping you depends on your own circumstances BUT more than likely "yes". 

Here's the basic fundamentals behind the concept:

with interest rates skyrocketing to 4.0% lately........(OK, I'm being sarcastic because most rates have been below that, but let's use 4% because it's a good round # as high as it is....)   every additional $10,000 in mortgage loan principle costs $40 / mo. to finance for 30 years. 

SO let's say you are a wee-bit DTI challenged because for whatever reason your $40k auto loan's $750 monthly payment has you only able to afford a $200k home.    But you are half way thru that 6 year auto loan and still owe $26-28k?  Hopefully, you are too far underwater to refinance the car and reduce your payments to $590 a month for another 4 yrs but you just opened up $160 in your monthly mortgage buying power which allows you to purchase a home that's $240k now.

Of course if one originally bought a vehicle when one's credit was less than stellar you'd likely have a higher rate and now qualify for an even better one which helps in compounding the monthly savings.    A $40k vehicle financed at 0% is a payment of $555 but financed at 4.5% is $634.  That $80 monthly difference is $20k more in mortgage loan eligibility.