Refinance for Self-Employed - running into a snag

[Robin W.]

I'm attempting to refinance a 2-unit rental property I've paid down over 15 years, but feeling discouraged. Currently there is 150k left on the mortgage at a high interest rate of 5.5% at a fixed 30, and I was hoping to lock in lower rates offered to take some pressure off the monthly mortgage payment and increasing property taxes. 

When I approached the same major bank currently handling my mortgage, they told me I'd easily be approved for a 150k loan, cutting my monthly payment in half, and locking me in a 15 year rate of 2.8- 2.9% instead of my current terrible 5.5% rate. But now I hit a snag because I'm self-employed and they require two years of tax returns for self-employed.

The issue is my 2019 tax return features a stint on unemployment after a corporate layoff, and then in 2020 I changed industries earning at first 50k as an independent contractor, but now in 2021, this industry change led to considerably more income for 2021 (100k+). I'm essentially earning more as an independent contractor than I ever did as an enterprise employee, but because I can't file my taxes for 2021 yet, then only my 2019 and 2020 income will be considered making me unqualified, despite an 851 credit score and no debt other than current mortgage of 150k.  

I asked if I could prove Year-to-Date earnings with my contracts, invoices, and bank statements, but they said underwriters always fail these exceptions for self-employed. Am I really stuck in applying for these rates until February or March reflect 2020 and 2021? 

I'm so worried it's my last chance for these rates.

[Brie Schmidt]

@Robin W. what you are describing is a rule for every conforming loan.  Once you have 2 years of tax returns they will use the average of the 2 years as your income to qualify you.  You can look for a portfolio loan which does not have to adhere to conforming guidelines but be aware the upfront fees and rates are much higher and won't be anywhere close to the rate you were quoted.  I would ask the bank you talked to if the average of the 2 years would qualify you for a loan in spring when you file your taxes, if not you are looking at spring 2023