I don't know the details of your current loan, but I think I have an idea.
First, I can see you put at least 20% downor so based on your current balance and original purchase price. I don't know exactly what your original loan balance is but rate and balance you currently have, I believe you did put 20% down. This really helps.
I would find out if your loan is currently owned by Fannie Mae or Freddie Mac. There is a refinance program called HARP (Home Affordable Refinance Program). Without going into too much detail, it's designed for homeowners who have a Fannie Mae or Freddie Mac loan who fit either of the two situations:
1.) Are at or above the value of their home
2.) Have some equity, would like to refinance but do not want to incorporate mortgage insurance now that they have less than 20% equity.
HARP solves both of these problems if your loan is owned by Fannie Mae or Freddie Mac. Bank of America is the largest Fannie Mae lender, so there's a very good chance your loan is owned by Fannie Mae.
As you can see, you do not have 20% equity anymore. A HARP refinance would not require you to add mortgage insurance as long as your current loan does not have it, which I don't believe you do from the figures you gave.
Next, HARP DOES allow non-owner refinances, so you can refinance under your current situation. If you disclosed this to Bank of America, this could be the reason their pricing is high (maybe).
I would treat this refinance like it is your house. Even though you may need to refinance as a non-owner property due to your move, you do plan on staying there eventually. You need your payment lowered to help service the debt with your rental income. HARP will not last forever nor will the low rates. HARP is set to expire in May of 2011 (just extended) but rates will likely be higher soon.
Many, many questions need to be answered, but if this is something you're interested in, read this blog post on HARP:
Hopefully this gives you the options your looking for. HARP is a true consumer refinance, so you can shop the pricing around. You do not need to go back to Bank of America. Finding a lender who specializes in these loans will help educate you on what's available and whether this is right for you.
By the way, Magnolia is one of my favorite neighborhoods in Seattle. Great place.