Could renting by the room affect Appraisal, Refi & HELOC

[Mala S.]

I am considering renting a 3 br apartment by the room. This is in a 3 unit house where I will be living in one of the units and the 3rd unit is rented with a typical lease. Renting by the room makes sense for the location since if I listed the whole apartment I would likely get 3 friends wanting a roommate situation anyways. I would prefer to have an individual lease with each tenant in these cases. So my question is: I plan on doing a refi or getting a HELOC within the next year. Will the above affect the appraisal of the property? Do lenders frown upon this arrangement? Could this cause any issues with a refi or heloc application? Thanks in advance for taking the time to respond!

[Chris Mason]

Originally posted by @Mala S.:

I am considering renting a 3 br apartment by the room. This is in a 3 unit house where I will be living in one of the units and the 3rd unit is rented with a typical lease.

Renting by the room makes sense for the location since if I listed the whole apartment I would likely get 3 friends wanting a roommate situation anyways. I would prefer to have an individual lease with each tenant in these cases.

So my question is: I plan on doing a refi or getting a HELOC within the next year. Will the above affect the appraisal of the property? Do lenders frown upon this arrangement? Could this cause any issues with a refi or heloc application?

Thanks in advance for taking the time to respond!

 Hi Mala,

No, we don't really care about these arrangements. In 99% of cases we will not count the "border income" in our mortgage income math.

The only possible thing that will come up is if it looks "too" rented -- to the point that the appraiser doesn't think you live there -- in which case it'll look like (even though this isn't true) you're trying to get a primary residence mortgage (with the better rate) on a pure investment property. Host the appraisal yourself and have some personal stuff out (family pictures etc) and awkwardly be like "uh, so, this is my bedroom..." when walking the appraiser around.