I went to a local bank and they don’t seem to understand how to use AirBnB rental income for the refinance. Thanks for the help!
I refinanced before doing Airbnb. I know a friend was trying to show as much income as possible to be able to buy a property. It’s always interesting to tell someone what we do and they have no clue. We, hosts, are so involved in this world we forget is still brand new.
Have you talked to your accountant or spoken to a mortgage broker? They might be able to help you.
We are right in the middle of this and it seems that the underwriters are having trouble understanding the theory behind AirBnB. They are thinking we are a full on Bed and breakfast.
We’ll know more tonight. Supposed to close on our refinance tonight. If for some reason it does not go through, I can only see that this will be a pretty big deal for the AirBnB business. Not being able to refinance for any reason just because you host for AirBnB. Not good.
I know it’s been a while since I first commented on your post.
Turns out we were UNABLE to refinance because we host two rooms on AirBnB. I was waiting to get my rejection letter in the mail before I updated this post but it never came.
We were only trying to refinance so that we could save a little money but at least with this company, we were not allowed.
GreenLight Loans via Nationstar Mortgage
Thanks for sharing. That IS a big issue, and worth letting other hosts know about. I am sorry this turned into a problem for you. I wonder why.
You don’t want Nationstar anyway, they are one of the worst mortgage loan servicers on the face of the planet.
I think it’s because it’s not income that is actually “reliable” in their minds. They want to see a long term tenant on a lease or other verifiable income. You might try submitting it as a P&L, like self-employment income. Make up a business name and do a P&L statement. Most of them will accept that.
Nation star is my current mortgage lender. Have not had any issues with them in the past.
This is our primary residence and Nationstar is our mortgage lender.
They wanted all kinds of information including our income tax returns which shows all of our income including the AirBnB income. That’s what made them ask about it:
"Underwriting is asking for a letter of explanation regarding: Reason for Subject Property being Listed as a Seasonal Rental on Tax Returns & if Rented Seasonal where do you reside at the time of the property being rented?
Are you able to provide a Signed & dated letter explaining the above?"
We had to supply letters explaining what exactly AirBnB is and why we rent out 2 of our bedrooms and where we stay while the rooms are being rented (in our bedroom in the house). They ended up not being comfortable with us renting out the spaces and rejected our application.
Our overall income is great, we both have great jobs that have been held for many years, we both have GREAT credit scores and no debt. The ONLY reason we were declined was that we host for AirBnB. The agent that was working on our application was quite surprised that the lenders felt uncomfortable because of AirBnB.
Ok, so basically come up with a fake story to explain the seasonal rental.
I’m not very comfortable with lying, especially if it is something that I’m signing - but if we ever decide to do this again, we will consider it…
I am not following your story. Why is the mortgage lender not comfortable with you earning money basically through revolving roommates? What is it that the lender is not comfortable with? So if a relative decided to stay with you for part of the year and pay you money for that, the lender will deny you? What am I missing here?
Are you saying that if you reported less income (with just the main jobs) then the lender would approve you in a heart beat?
Thank you for the very detailed response Billy Bob. Ok…one last part that I am missing here. The underwriter is human and not a computer - correct? I guess I am still missing the part about Romeo explaining that it is their primary residence and will continue to be their primary residence.
Why is the underwriter ignoring this? Is the underwriter assuming that Romeo must be lying? Can the underwriter not see that “seasonal rental” isn’t always translated into their exact definition? I just keep thinking back to everyone I have ever rented from as a roommate and that person had a mortgage. Sometimes I just paid by the week. I doubt any of them even reported it as income - but if they did it just seems strange for it to be assumed the owner cannot be living there too.
Seems as though Billy Bob knows what he is talking about. My spouse and I will carefully look over everything that you’ve written and try to start fresh with perhaps a different lender.
Thank you for all of your advice.
Are you in the mortgage business?
Thanks for the further explanation!
I’m not able to explain it as well as BBM, but having applied for loan modifications (which ask for everything but your first born on a platter), they don’t want to see income that isn’t verifiable every month and “steady.” Because I am self-employed, I made up P&Ls of YTD income showing that I had plenty coming in, and then also had to show bank statements to prove it. Yes, I mixed my Air income with the other self-employed income and they weren’t the wiser. He is right, you can’t breathe the words AirBnB, it’s just not considered regular, reliable and steady income to the lenders. (But I personally don’t believe you have to go as far as deactivating your listing (I don’t think they are going to look you up!)
You just have to meet a certain debt to income ratio and it has to be with “accepted” sorts of income.
In my case, they accepted my substitute teaching stubs, (even though that also isn’t regular), and together with my P&Ls, and it was enough. I could not use so-called rental income unless I had a lease agreement to show and I didn’t.
As for lying to banks, don’t get me started. They are the biggest liars of all and I can cite instances where BofA outright lied to me many times during the modification process where they dual tracked me (which took a year and a half–they do NOT want to modify, they are looking for every reason they can to grab your house)… The too-big-to-fail banks caused this financial crash that caused 10 million Americans to lose their homes and many millions more about to. They bundled our loans as securitized commodities and traded them on Wall Street… they destroyed the notes (too many to warehouse) and then when it came time to foreclose they doctored millions of them with the famous robosigners, and presented photoshopped fraudulent documents upon the court to take your house. The banks are immense liars!!!. Listen to these amazing podcasts here, to learn more. http://foreclosurehour.com/past-broadcasts.html. This prominent foreclosure attorney, along with our former governor, have seen it all and help to expose all their shenanigans, and also offer a solution that will help everyone from Donald Trump to the little guy on the street fight these banks… Off topic for another day, but something every homeowner should become educated about. What the banks and Wall Street did, with the aid of the U.S. government, was to perpetrate the largest financial fraud on the American public through their shadow banking system and fraudulent mortgage system…
You’re mixing me up with someone else. I was not the candy wrapper person.
It was not really a re-fi. It was a modification. I’m in a HAMP modification at 2% at the moment. I don’t think I can find lower than that presently. I am only here but for the grace of god. They illegally tried to grab my house and made my life hell with a foreclosure that never never should have happened. I have all their lies on tape. Just listen to the podcasts and you will see what I mean. I am one of millions.
I too am also having trouble refinancing… I own a mixed use property with vacation rentals on top and storefronts downstairs. Would you think it would be smarter to just say “Company A” rents from owner with a 5 year lease at a high rent of 10k a month(or 50% of gross revenue), vs saying “I run a vacation rental property out of here”. Seems like lenders are indeed afraid of the unknown and seeing a lease at a high rate would actually make them happy. Especially if the property grosses about 20k per month
Franny and Freddie the big lenders in the US are just now allowing STR income to counts as total income. HOWEVER, you have to have claimed this income on your last 2 tax returns. We refi’d no problem without STR income, so I’m not sure if it would have been considered. We didn’t do a cash out, just interest rate decrease.
Shabazzi312, Mixed use properties are qualified on whole different level than just a rental property vs. a single family home. Just make sure that your tax returns for the past 2 years can support the refinance. Do NOT try to show any Airbnb income - it just won’t work because there are no leases involved and short-term rentals in and of themselves are riskier. Best of luck!
This makes sense, Thanks I will just add that a corp rents my apartments for 10k per month or 50% od gross revenue