OK, here's my situation. Bought a home in 2004 for 177k. Things went up and similar homes in neighborhood selling for 195-200k in 2005/2006. Downturn comes and same homes now selling for 180-185k. I've lived in this area of B'ham, AL all my life and I know the neighborhood is stable and plan to stay in the house for at least another 10 years.

I put 5% down which amounted to 14k with closing costs, etc. My loan was a split to avoid PMI.

1st Loan - 5.375% due and payable in full Jun 2011 - Balance $132,500
2nd Loan - Interest Only payable in full Jun 2009 - Balance $25,500


My wife and I are frugal and are savers. No debt other than home, cars paid for. I have 72k cash in a money market account that got 3% last month. The interest rate changes each month but for the past couple of years, it's averaged 3.5. My goal is to have 80k in there by Jun 2009 when Loan 2 comes up and pay it off in full and ride the 5.375% until Jun 2011. During that period, I'll be looking for the best interest rate and will finance it then if it comes up.

We are mid to late 30's, looking for a low stress life doing jobs we enjoy as a type of semi-retirement so my goal is to pay off the house ASAP.

Any suggestions on this plan? I just want to make sure I'm doing the right thing going ahead and paying this 25k off now and then starting on the 132 aggressively afterward.

Thanks all.