My wife and I have a *non-retirement* brokerage account that has enough money in it to pay off our personal mortgage. The mortgage is about 72% of the value of the account so that leaves some room for taxes and to keep a little bit invested. The interest rate is 4.0% and I have two competing thoughts.
A few ground rules: 1. the interest is not enough to matter after the new tax law changes; deducting interest payments has no bearing on the decision. 2. I have no idea when we'll move next. 3. The tax and insurance is $425/month. The principle and interest is $600/month.
Keep the mortgage and stocks. Borrowing money at 4.0% is likely the cheapest money I'll ever borrow. We can afford the payment. My brokerage account has done well the past ten years and I don't see why taking out money, paying taxes, and putting it into a less-productive asset is a good idea. I don't know why I would pay off future debt with today's money. last year the account earned $4,000 in taxable dividends.
Sell the stocks and pay off the mortgage. If I had a paid-off house would I borrow money specifically to invest? Not on my personal house. I have a mortgage on an investment property where I did just that but that's a separate bucket of money. Paying off the mortgage would give me peace of mind, would allow me to get rid of the biggest debt we have, and would free up $600/month. I could reinvest that $600/month how I saw fit and if the (overpriced) market goes down I'll be able to buy back in at cheaper prices. We have two kids in daycare that cost about $1,500/month so removing any monthly expenses is felt right away.
What say you, experts?