Here is my dilemma.
My wife and I are in our early 30s with a newborn baby.
We bought our house back in 2014 with a 5/1 ARM the rate is now at 3.125. When we bought it we expected to move in 2018. Now that is not going to happen,
With interest rates looking like they will be going up, and quickly I'm considering my options.
The home is worth somewhere between 420k and 440k.
We currently owe 262k
No PMA
The rate is fixed at 3.125 until June 2019 then can go up by as much as 2% per year to a maximum of 8.125 (Prime plus .125)
The rest of our financial picture.... We bring in about 100-110k and have been saving about 40% of that, in various means for the past 4 years.
the breakdown of that 40k is: 10k into 401k 11k into Roth IRAs 10k into college and school funds and 5-7k into the brokerage account.
as of today we have about 100k in the 401k. 40k in Roth IRAs. 10k in school funds (one for college and one for private primary schools)
we also have about 70k in a brokerage account.
Option 1 is to do nothing, that is, to keep doing what we have been doing until June 2019, splitting that 40 into the buckets above and then paying it down before the recalculation.
Option 2 is to pay it down now throwing all of my disposable income at it.
Option 3 is to refinance now to a fixed rate.
Sorry I hit tab enter and it posted 1/2 way through my post.