I wouldn't be in a rush to pay off the mortgage this month - consider taking it month by month for awhile. Although I don't trust Suze Orman's investment advice, she has mentioned that it can be a good idea to do nothing with an inheritance for a year, if it was someone very close to you.
Has your ARM interest rate dropped yet? It should, given rates have dropped since last year. Online I see fixed-rate 15 year loans at 2.8%, which is the lowest I've seen. I think you have time to wait and see if your ARM payments drop, and if you want, maybe even refinance at rates so low they look silly.
I can understand hating debt, but I'd encourage you not to act too hastily. Check out how mortgage rates are falling, and take your time to decide.