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Airbnb rentals can play havoc with your mortgage

How do you refinance a mortgage when you both live in your home and make money from it?
Jaap Arriens/NurPhoto via Getty Images

Renting out your home on a service like Airbnb is supposed to be good for your bottom line, but it's now clear that it can create some headaches if you're a homeowner. The Wall Street Journal is warning that banks may turn down your attempt to refinance your mortgage if they learn that you've rented your home on Airbnb. Simply speaking, banks tend to see homes as either personal residences or investments and don't like the risk associated with the latter. While some banks may allow a gray area between the two, others won't be so kind -- Bank of America, for example, won't give you a home equity line of credit if there's a "material amount" of commerce in your home.

Airbnb tells the newspaper that rejections are "incredibly rare," although it doesn't have statistics. It's believable, though. Only some hosts rent their homes frequently enough that it could make up a large chunk of their income, and a mere fraction of those people would both want to refinance their mortgages and run into trouble doing it. Still, this is a useful heads-up: you may have to either live with your existing mortgage terms or deal with the higher interest rates that come with treating your home as an investment.

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