Selling Property

I’m 3 years into a 30 year fixed at 4.875%, monthly payment of $1842 with $332,000 remaining. We paid $435K in May of 2009 but with next door recently selling for $340k and other similiars in the neighborhood selling for 369, 395, 330k, my valuation will definitely come in under $400K which means I’ll have to pay PMI if I refinance. If I save $200/mo after refi but have to pay $200 PMI then why do it since it’s not saving me any money on the monthly payment? One reason I was given was eventually my loan amount will be payed down to a point where PMI will go away. But how long is that going to take? Second reason is my property value in the future will go up to a point where PMI will go away. But it’s anybody guess when that will be. Are these two reasons valid for doing the refi?

So, even though I’ll be locking in on much lower rates, is it wise for me to refi now?

K-12 school issues will have us rent out our home next summer and rent a home in neighboring county. Selling isn’t an option because of the market.

1. 2011 AGI is 146K. MTB=24% ETB=11%
2. 2012 AGI will be 152K because of guaranteed raises.
3. We are already maxing out retirement savings.
4. Although we have good income, we have little wealth.
5. Renting will result in a net loss of approx $6K a year. (Assuming it’s rented every month).
—Rent vs. Mortgage
—Property Management and maintenance contract
—Increased Home Owners Insurance
6. We understand that we won’t be able to take the losses in the current year because our AGI is above $150K.
7. We will be able to carry the losses forward if we sell the property at a profit.
8. We are not Realtors and cannot honestly put in the 720 hours to make this an Active Activity.
9. We have found the $6K in our budget through a paid off vehicle.
10. We’ll be renting for 40% more than our current mortgage due to market conditions in new neighborhood (Schools make it worth it).
11. Mortgage interest deduction on current home yielded $3500 in reduced taxes on 2011 Fed Income Taxes.

Questions:
1. Even with the 6k/yr loss will the rental income raise our AGI even more?
(My guess is it should zero itself out because of the net loss)

2. Anything else I should be doing to prep ourselves for the shock?

Note: Somehow I messed up and this got posted as a standalone thread, not in the RE thread. I don’t see a way to delete my original post.

TIA! D.

Has anyone tried alternatives to traditional bank mortgages? Apparently, there are methods to purchasing a property without interest (or what some call, usury) by allowing the bank to buy a property that the end-buyer is interested in and thereafter selling the property to the end-buyer at a premium but with “zero interest”. The point is, this is an alternative for those whose beliefs are against buying/selling using interest.

One such alternative is called “murabaha” offered by, inter alia, Devon Bank.

The problem is, I can’t find enough reviews about this thing and I don’t know anyone who purchased a property using these methods. Can anyone here shed more light on it or share his/her experiences with us regarding traditional mortgage alternatives?

Thanks.