5yr. Balloon Loan w/ 10yr. Amort. (Any hidden things I should worry about?)

Guess I'm good

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TL;DR are there any problems I should expect to encounter with a balloon note, assuming my wife and I have very secure jobs?

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I think the bank gives you an option to refi before the balloon payment. One of my properties is a 5 year fixed with balloon payment due next may. I'm probably going to refi to a 10 year amort.

I don't think a balloon note is a "safe" move at all.

However, you have a clear plan and do not appear to have the dreaded disease of "our income will never be enough to retire this debt." Having a clear plan and solid budget fundamentals is literally 90% of the battle - take everything else I say with that in mind - you're "probably" fine with your plan.

On the other hand, what you're going to struggle with is the rising internal expectations associated with your rising gross household income. I'm of the opinion that you should live like monks - now - get the debt at least to an easily manageable level, and get off the train of paying a lot of interest with little retirement of the principal.

That balloon note will be sitting out there waiting - like you will have paid all this money and still have to make that loan and pay it all over again. That seems (potentially) demoralizing and self-defeating.

You didn't talk specifics about current income or expectations and I respect that. However, I would go back to square 1 - cut spending to the absolute, painful bone, until you cut the overall debt load (possibly excluding the mortgage on the primary home) to half or less of what it is now. Otherwise, in your shoes, I would feel like a debt slave for the foreseeable future.

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On the other hand, what you're going to struggle with is the rising internal expectations associated with your rising gross household income. I'm of the opinion that you should live like monks - now - get the debt at least to an easily manageable level, and get off the train of paying a lot of interest with little retirement of the principal.

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I can't argue that. We run a tight budget now, but we still have some "fun" things budgeted. Monthly date nights, plated, yoga, etc... Could we free up some money by living in a hole? Sure. But I think we're doing a pretty good job by freeing up nearly $4,000/month of after tax money (Currently $1k to interest only). I max out my 401k. She has her 457 plan or whatever it is. I put about $25,000 into my house this year so that it would let me at least ride out the next 5-7 years with little to no maintenance. It was getting to a point where the repairs were beyond necessary anyway. We have a modest $235k home in Metairie. Our house has three extra bedrooms to grow a family. Staying in that home is part of the 5-7yr. plan. The only foreseeable changes are her car's lease ending and having a child. Yes, I said lease. Her thirteen year old car was dying on Claiborne and I was uncomfortable with that situation. We found that a lease fit us best at the time since we might need to upgrade for kids in the future.

Her income should jump from $55k to $150,000-$170,000. I work for a private company here in New Orleans. With bonus, which isn't guaranteed but historically happens, I get close to her future lower limit.

Based on our current track, it really steers us somewhere towards scenario 1 & 2 listed at the top. That leaves us with a balloon note at the end of nothing or next to nothing.

Any chance you could get a fully amortizing loan and not have to worry about refi on the balloon? My worry would be that interest rates really can't go anywhere but up and you are taking a chance on the refi at 5 years reflecting that.
If you could lock in a 10 yr rate for 100 more (give or take) basis points, I think it would be worth it, rather than the unknown of future interest rates.

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And I said "monks" - but as long as this is manageable, it doesn't seem unreasonable. However, you'll find that as you make more money, more and more of this kind of budget item will seem "essential" and not "luxury."

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You're probably right. Plated transitions into Clancy's every Thursday and Romney spin classes get tacked on to yoga subscriptions. I'm sure it could happen. Hopefully we can keep that stuff at bay.

I really appreciate everyone's input.

Here's the wrench. Your wife decides she doesn't love her job and wants to do a fellowship. Happens a lot in primary care. You might have to move and she will not get the salary bump you expect (at least for another 2-4 years).

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Your wife decides she doesn't love her job and wants to do a fellowship. Happens a lot in primary care.

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She is already in Fellowship for Allergy/Immunology. Around here, I don't think PCPs make shite. If that were the case, we'd probably be talking about $90,000 - $110,000 salaries.

I'm not saying that someone who's about to get forclosed on should spend like a drunken sailor, but if you and your spouse are bringing in close to $300k a year why live like a monk?

Especially if you are young and don't have kids.

Exactly my point, live it up and enjoy things to the fullest while you still can. Sounds like u are doing it right so far. It will be a lot harder to travel so much when the baby comes, and as the kids get older the expenses really rack up.