Unpermitted additions in refinance appraisal

[Marie B Barde]

Hi:

I would like to refi my property to take advantage of current low interest rates.  I am paying 4.25, 30 year fixed.  

Problem:  I have added a non-permit rental by converting my partner’s pottery studio in back.

Question: Do I tell my current banker about the studio and ask her advice?   Could that conversation result in problems with my current loan?  Should I approach the other bank with whom I have accounts and get a new loan there?   Would they even approve a new loan with this unpermitted studio?
 
Finally, would the risks and/or headache be worth the additional couple hundred per month?

Marie:  Oakland, CA