Sell stock to payoff house?
My wife and I have been married for 17 years and have 2 kids. We are both 40 years old. Our combined income is $200k. We own a home worth approximately $1.4M with a remaining mortgage balance of $590k at 5.25%. We are generally new to Ramsey, and had never really considered the idea of paying off our home early. Our principal and interest payments on the debt are $3,260 with a total mortgage payment if $5,000 with taxes and insurance included.
We have a brokerage equity portfolio of about $1.1M and a retirement equity portfolio of $1.4M.
After listening to some of Dave's content we have considered selling stock from our brokerage account to pay off the mortgage early. Due to the unrealized gains in the portfolio, we would have to sell about $655k in equity from the portfolio to net the remaining mortgage balance because of capital gains taxes. All in, it looks like we would be subject to about $65k in capital gains taxes on the sale. Essentially that works out to be 29 months worth of interest expense (not total mortgage payments).
My question to the group is: would you still advocate for paying the house off early in light of the substantial tax bill that would be generated?
A few other bits of data that may be helpful:
If I dont prepay the mortgage at all, there is about $580k in remaining interest due on the life of the loan.
Our annual budget looks something like this:
Income: $200,000
Less: Taxes -$50,000
Housing: -$65,000
Retirement savings (1 401k and 2 IRA's): -$39,500
Discretionary funds: $45,500
We don't feel like we live all that lavishly and there isn't much extra at the end of each month.
I appreciate all the advice!