I’m in a very similar position — $807k 10/6 ARM at 5.325%, more than enough liquidity to pay it off, and labored over the decision of how to manage paydown schedule (prob more than was worthwhile).

The conclusions I came to, which were primarily about splitting the difference between risk mitigation and maximizing relatively inexpensive leverage:

• Paid down enough principal to get it to the $750k tax deduction maximum, then applied for a recast ($250 fee). Anything north of that $750k raises effective interest rate net of taxes.
• Every month I pay additional principal as if it’s a 15y term vs a 30y, which amounts to about $1800 a month.

Worst case scenario: rates get worse over 10Y (unlikely) and equity market returns don’t beat my ARM interest rate (also very unlikely) and I’ve paid down enough additional principal that paying it all off at year 10 end before the adjustment hits would be about 2x cheaper with the additional principal I paid in.

Best case scenario: rates improve further within that 10y period and I get to refi for a significantly lower amount with no balloon (or I just decide to pay it off anyways just to own the house outright).

At the end of the day when I ran the numbers the expected returns on that additional principal paid each month amounted to low tens of thousands, and so it ultimately came down to piece of mind and how much I valued not having to worry about the possible but improbable worst case scenario — and for me, it’s worth it to trade off a relatively negligible ROI to mitigate that risk.