What you need, I think, is an agreement that WHEN you refinance, he is off the deed WITHOUT you having to buy him out.
Since the house has no equity right now, and he is not contributing to the expenses, then he should NOT share in any increased value it might have by the time you refinance.
I can understand him wanting to stay on the deed so long as he's still on the mortgage - since he's technically on the hook to the bank if you default, it really is only fair that he be in a position where he could take over the house if you did default.
But you need it written so that you don't end up having to buy him out of any increased equity in the future.
It sounds like the cost of the house payments is affordable and comparable to rent (although remember to include things like costs of insurance and maintenance when you do the math). Also consider whether you could get a roommate to help with expenses and put that money towards paying down your loan quicker? Remember too that if you can't refinance for four years, interest rates are going to be SIGNIFICANTLY higher by then - will you likely be able to afford a larger payment?
I would just hate to see you struggle for four years, paying more than rent (once the costs of repairs and maintenance and insurance figure in) only to find that you can't qualify to refinance in four years because increased interest rates have bumped the payments up to $1200 a month. Sit down and do the math very very carefully. Think of all your options. (For instance - do you have family that you could move in with for a while? Could you rent the house out for the cost of the payments, and save up while living at your folks to pay down the mortgage to where you can sell the house? Just thinking creatively here.)
