If you have bonds in your taxable brokerage account, these are better to sell because of the lower capital-gains tax.Grabiner, re: your 2nd paragraph, I'm wondering why it's better to fund the large down payment via selling stocks rather than by selling bonds in taxable brokerage?You can get a better return paying more down than you can on the money-market fund. Therefore, you should only keep enough in the money-market fund for your immediate cash needs and emergency fund; all the rest should go to the down payment. (The reason there is a big difference is that most of the mortgage interest is non-deductible, while money-market interest is taxable.)
If you have any bonds, then you can also get a higher return without any extra risk by selling taxable stock for a larger down payment and moving an equal amount from bonds to stock in your 401(k) (unless the capital gains tax outweighs the interest savings). If this means that you sell all or most of your stock, you will be able to rebuild the taxable stock invest quickly because you have little or no mortgage payment.
But if you have bonds only in your 401(k), you can still sell bonds to pay down the mortgage or increase your down payment: sell taxable stocks and move an equal amount from bonds to stocks in your 401(k). (This is what I did when I paid off my mortgage. I sold taxable stock, which happened to have a capital loss because I sold in a market decline, and then moved an equal amount from bonds to stock in my employer plan to keep the same stock holding.)
Statistics: Posted by grabiner — Tue Dec 31, 2024 2:31 pm