Sell or Rent?

If your all in expenses are $3700/month on the condo do you really think you can rent it for enough to make it worth while keeping? If so, maybe try to do that now and buy a 2-4 unit property to house hack for one/two years before buying a single family to raise your family. The house hack can cover most of your housing expenses while building equity in that property and your condo.

On that note, is there appreciation potential for the condo? What would it be valued at today and have you lived there for 2 years yet? If you have been there more than 2 years and could sell it for a decent amount then those gains would be tax free.

Believe it or not, your mortgage interest rate is not historically high. My suggestion is not to put extra money toward the mortgage but rather to invest any extra money. A total US stock market fund or S&P500 fund is likely to appreciate more than 6.25% annually so you would come out ahead by investing.

Are you specifically interested in being landlords, or just thinking of it as a way to get around selling the condo?

You will probably want to "run the numbers" to compare your options. I don't know the current interest rates or the state of the housing market in your area, but with seller fees etc, you may well come out having lost money on the house if you sell now, especially if you've been in a very short time and haven't been able to amortize the buying and selling costs over several years. Even if you do come out behind, it might still be worth it if you'd come out much worse after holding it for longer.

You will (usually) still have some utilities costs in a rental so you can't cut those out entirely, but I find renter's insurance is usually way cheaper than homeowner's insurance, at least. The power bill on our rental now is pretty hefty, but it is a large and old house.

When you say your benefits cover all housing costs, do you mean you get a certain amount every month that happens to cover your housing, or you have some kind of job benefit that covers whatever your housing cost is? If it's the latter, it sounds like you wouldn't be able to invest the extra if you moved, but I've never heard of any benefit like that.

It's also very important how you and your wife feel about the housing situation. If you both love the house but feel it's just expensive, it might be worth it for you to optimize somewhere else. If you're already saving/investing one of your two incomes, you probably have a good savings rate already and don't need to cut out every possible expense to race to a finish line.