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MBA Weekly Applications Survey February 9, 2022: Rising Rates Put Damper on Refis

The Mortgage Bankers Association announced Wednesday in its Weekly Mortgage Applications Survey for the week ending February 4th that mortgage interest rates continued to climb last week, snagging momentum for homeowners anxious to refinance before rates surge even higher. 

The Market Composite Index fell by 8.1 percent from the previous week on a seasonally adjusted basis. The unadjusted Refinance Index also fell 7% from the last week, and the refinance share of all mortgage applications decreased to 56.2 percent. The seasonally adjusted Purchase Index dropped 10% from the previous week.  Read More

Are You Considering Using Short-Term Rental Income To Qualify For a Refinance Say VRBO or AirBnB anytime soon?

What’s short-term rental income? It’s the real estate term that stands for the money you earn from renting your home out for a day, week, or month at a time. If you’ve got a property with a stand-alone unit like a “granny flat” or ADU (additional dwelling unit), you could rent it for short periods of time. Other people might travel for part of the year, and rent their home out for the months that they’re gone.

Any of these circumstances can qualify as short-term rental income. With the rise of businesses like VRBO, Airbnb, and HomeAway, you’ve got more opportunities than ever before to make money through short-term rental income. However, it didn’t always allow you to qualify for a mortgage refinance, because short-term rental services don’t offer a lease agreement.

How have rules and lenders changed their view of short-term rental income and mortgage refinancing?

Mortgage lenders are catching up with the short-term rental business, and the majority of them will now consider income from your vacation rental property when you’re applying for a mortgage refinance. This wasn’t always true: up until 2019, some lenders didn’t accept short-term rental income to qualify for refinance loans because there wasn’t a lease agreement. Now that short-term rentals are more common, you can use several ways to prove you receive rental income from part of your property or part of the year for a single-family home.

Airbnb partnered with several major mortgage finance lenders in 2019 to allow hosts to use the income they get from a room in their house or a separate dwelling unit to apply for a mortgage refinance. VRBO, another platform, has also partnered with mortgage lenders to allow their records to document short-term rental income.

In the past, only traditional rental properties like separate investment homes could be used as income to apply for mortgage refinancing, primarily because signed lease agreements were required.

Not every mortgage lender will accept short-term rental income as part of the qualification process for a 30-year fixed rate, 15-year fixed rate mortgage refinance, whether it’s a cash-out refinance, a home equity line of credit (HELOC) or another type of refinanced mortgage loan. This is yet another reason why, if you use short-term rental income to pay all or part of your mortgage each month and are considering refinancing, you can benefit from working with an experienced mortgage professional.