3SOF

My 5/1 ARM reset a couple months ago from 5% to 6.875%. This increased my monthly payment by $175.  I'm tempted to re-fi, but I'd rather sell. However, I've read that if you list your house and it doesn't sell and you then take down your listing and try to re-fi, the banks won't do it until the listing has been down for somewhere between 3-12 months (varies by bank). So this is a risk in trying to sell if you are not successful.

If I re-fi, I don't want to pay a few thousand bucks in closing costs and then end up selling in 2008. I've read about no-cost re-fi's where they raise your rate by say a quarter point and the lender covers the closing costs. However, I'm thinking they must have something in place to prevent someone from getting a loan like that and then selling the house 3 months later, otherwise they'd lose money on the deal. Not sure, but it makes logical sense they wouldn't do a loan like that with you and then let you sell right away.

Two things to note: 
1. I'm in a fairly stable housing market (Seattle). It's a buyer's market here, but not the way it is in many other places
2. I don't want to rent my place out

What would you do? Recommendations welcome.

you know, my wife and I have bought and sold three properties within our 8 years of marriage and we have never used a realestate agent for selling our properties. my wife is the one who did all the research and basically did the bulk of the work. Granted my wife is a stay at home mom therefore it was easier for her to do than it would have been for me. we sold our properties through "For Sale by Owner" and really its not as hard as realtors make it sound to be.
its a two edged sword, you save a bundle and its more money in your pocket, it just takes a litle more work but its worth it.
in regards to banks not letting you add the closing costs to your loan and not permitting you to sell the house three months later, that should not be a problem because I would think they get paid back that money by the next buyer of the same property. believe me, banks get their money one way or the other so worry about that.
if you're not in a hurry or in real need to get from under your house I would simply refinance until the market becomes a little more in your favor - a sellers market.
jmho, good luck!