Should we pay off the house before the baby arrives?
I am hoping that the bright Boglehead minds will help us decide what to do with our mortgage in light of our changing family situation:
My husband and I are expecting a baby, our third. We have a four and a two year old already, and we both work full time. When the little one joins us, we'll have to make changes to our routine, and hire a nanny or an au pair, which will significantly increase our childcare costs (right now, both of our kids go to daycare, and it costs $600/week for both). Both of our families are in Europe, so there is no one in this country who could help.
We will have ~170 k left on our mortgage when the baby is born, and I am debating whether we should pay off the mortgage then, to free up the cash flow to pay for the nanny. Our loan is very good, though, 15y with 3.25% interest, so I am not sure if it's good to do it. We'd have to sell assets to pay off the loan, so there'd be a tax penalty, in addition to losing the mortgage interest rate deduction on our taxes. But getting rid of mortgage would allow us to have the same savings rate we have now, even with the hired help.
I appreciate any advice or opinion you may have. Thanks a lot.
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