If you have a $350,000 mortgage and your interest rate is 3% then you can never be sure what may hit you when your mortgage contract will be up for renewal. With a 3% interest rate you will be paying only about $1,660.00 per month, on a 25 years amortization. If there rates go up to, say, 12% (it did happen in 80’s) then you will be paying $3,620.00 per month.
In simple words – if your wage is getting only a 3% hike each year (Latest Conference Board’s numbers say that) then you may not qualify for that mortgage any more.
This may not be a big deal for many of us but it can become a serious trouble for a larger number of borrowers. In order to decide the path forward it is a good idea to talk to your partner. Women are likely to take debt more seriously than men. It might be a good idea to let the female partner deal with the re-payment of debt. (source)
While we actively try to pay off our debt but we are not very optimistic about our ability to achieve that goal within a year. For all practical intention it would be a good idea to plan it together.
Interest rate is not going to go up anytime soon but it is always a good idea to have some plan to manage your finances for the worst case.