Is it wise to sell company stock to pay down a mortgage?
"If by ""Company Stock"" you mean ""stock in the company I work for"" then absolutely sell your stock.  It is too big a risk to have your investments tied into the same company that is also providing your salary. If you mean stock as in general investments, I like to look at it this way.   If you have $25,000 stock and a $100,000 mortgage you ask this question: If I had a $75,000 mortgage would I borrow an additional $25,000 against my house to invest in the stock market? If the answer is yes, then you are taking a risk consistent with your tolerance for risk.   If you answer no, then your tolerance for risk says you'd be happier paying down your mortgage." Simply if your stock is still rising in price keep it. If it is falling in price sell it and pay off your mortgage. To know when to do this is very easy. If it is currently rising you can put a trailing stop loss on it and sell it when it drops and hits your stop loss. A second easy method is to draw an uptrend line under the increasing price and then sell when the price drops down below the uptrend line, as per the chart below.  This will enable you to capture the bulk of the price movement upward and sell before the price drops too far down. You can then use the profits (after tax) to pay down your mortgage. Of course if the price is currently in a downtrend sell it ASAP.
First off, putting extra cash toward a mortgage early on, when most of the payments are going to interest, is the BEST time. If you pay an extra $1 on your mortgage today,  you will save 30 years worth of interest (assuming a 30 year mortgage). If in 29 years you pay an extra dollar, you will only save 1 year worth of interest. That said, there are lots of things that go into a decision like this. Do you have other debts? How stable is your income? What is the interest rate on your mortgage compared to any other debts you may have or potential investments you might make? How much risk are you willing to take? Etc. Mortgages tend to be very low interest, and, at least in the U.S., the interest on them is tax-deductible, making the effective interest rate even lower. If you have some other loan, you are almost always better to pay the other loan off first. If you don't mind a little risk, you are usually better off to invest your money rather than pay off the mortgage. Suppose your mortgage is 5%. The average return on the stock market is something like 7% (according to my buddy who works for Wells Fargo). So if you put $1000 toward your mortgage, you'd save $50 the first year. (Ignoring compounding for simplicity, changes the exact numbers but not the basic idea.) If you put that same $1000 in the stock market, than if it's a typical year you'd make $70. You could put $50 of that toward paying the interest on your mortgage and you'd have $20 left to go on a wild spending spree. The catch is that the interest on a mortgage is fixed, while the return on an investment is highly variable. In an AVERAGE year the stock market might return 7%, but this year it might return 20% or it might lose 10% or a wide range of other possible numbers. (Well, you might have a variable rate mortgage, but there are still usually some defined limits on how much it can vary.) In the US, it is perfectly legal to execute what you've described. However, since you seem to be bullish on the stock, why sell? How do you KNOW the price will continue downwards? Aside from the philosophical reasoning, there can be significant downside to selling shares when you're expecting to repurchase them in the near future, i.e. you will lose your cost basis date which determines whether or not your trade is short-term (less than 1 year) or long-term. This cost basis term will begin anew once you repurchase the shares. IF you are trying to tax harvest and match against some short-term gains, tax loss harvesting prior to long-term treatment may be suitable. Otherwise, reexamine your reasoning and reconsider the sale at all, since you are bullish. Remember: if you could pick where stock prices are headed in the short term with any degree of certainty you are literally one of a kind on this planet ;-).  In addition, do remember that in a tax deferred account (e.g. IRA) the term of your trade is typically meaningless but your philosophical reasoning for selling should still be examined. "This summer I used a loan from my 401(k) to help pay for the down payment of a new house. We planned on selling a Condo a few months later, so we only needed the loan for a short period but wanted to keep monthly payments low since we would be paying two mortgages for a few months. I also felt like the market might take a dip in the future, so I liked the idea of trying to cash out high and buy back low (spoiler alert: this didn't happen). So in July 2017 I withdrew $17,000 from my account (Technically $16,850.00 principal and $150 processing fee) at an effective 4.19% APR (4% rate and then the fee), with 240 scheduled payments of $86.00 (2 per month for 10 years). Over the lifetime of the loan the total finance charge was $3,790, but that money would be paid back into my account. I was happy with the terms, and it helped tide things over until the condo was sold a few months later. But then I decided to change jobs, and ended up having to pay back the loan ~20 weeks after it was issued (using the proceeds from the sale of the condo). During this time the market had done well, so when I paid back the funds the net difference in shares that I now owned (including shares purchased with the interest payments) was $538.25 less than today's value of the original count of shares that were sold to fund the loan. Combined with the $150 fee, the overall ""cost"" of the 20 week loan was about 4.05%. That isn't the interest rate (interest was paid back to my account balance), but the value lost due to the principal having been withdrawn. On paper, my account would be worth that much more if I hadn't withdrawn the money. Now if you extrapolate the current market return into 52 weeks, you can think of that loan having an APR ""cost"" of around 10.5% (Probably not valid for a multi year calculation, but seems accurate for a 12 month projection). Again, that is not interest paid back to the account, but instead the value lost due to the money not being in the account. Sure, the market could take a dip and I may be able to buy the shares back at a reduced cost, but that would require keeping sizable liquid assets around and trying to time the market. It also is not something you can really schedule very well, as the loan took 6 days to fund (not including another week of clarifying questions back/forth before that) and 10 day to repay (from the time I initiated the paperwork to when the check was cashed and shares repurchased). So in my experience, the true cost of the loan greatly depends on how the market does, and if you have the ability to pay back the loan it probably is worth doing so. Especially since you may be forced to do so at any time if you change jobs or your employment is terminated." The more you put down now, the less money you are borrowing.  30yrs of interest adds up. Even paying a small amount at the beginning of the mortgage can turn into a huge savings over the life of the loan. That's why you'll find advice to make extra mortgage payments in the beginning.  The question is: Do you have a better use for that money?   In particular, do you have any higher-interest debt (higher APR than your mortgage) that needs to be paid off?  You generally want to take care of those first.   Beyond that can you invest the extra down payment money elsewhere (eg stock market) and get a better return than your mortgage rate?  (don't forget about taxes on investment profits). If so, that money will do more good there. One other consideration is that by paying off your mortgage early versus, for example, investing that capital in a mutual fund is that you are reducing your net liquidity to some degree. That is, if you find yourself needing an emergency infusion of cash it is easier to sell a stock/fund than to sell your house or get a equity loan.  I suppose if you were planning to need a lot of cash to start a business or invest in real estate, then maybe it would make sense to keep your cash more liquid. However, in your situation I agree with Joe. Pay it off. It feels REALLY good to write that last check! Yes this would be the same as when a corporation sells bonds. If it is the same as you describe. A product page would make it possible to give you a definitive answer. Also I strongly advice against taking out this type of loan if not for investment "I was going to ask, ""Do you feel lucky, punk?"" but then it occurred to me that the film this quote came from, Dirty Harry, starring Clint Eastwood, is 43 years old.  And yet, the question remains. The stock market, as measured by the S&P has returned 9.67%  compounded over the last 100 years. But with a standard deviation just under 20%, there are years when you'll do better and years you'll lose. And I'd not ignore the last decade which was pretty bad, a loss for the decade.  There are clearly two schools of thought. One says that no one ever lost sleep over not having a mortgage payment. The other school states that at the very beginning, you have a long investing horizon, and the chances are very good that the 30 years to come will bring a return north of 6%. The two decades prior to the last were so good that these past 30 years were still pretty good, 11.39% compounded.  There is no right or wrong here. My gut says fund your retirement accounts to the maximum. Build your emergency fund. You see, if you pay down your mortgage, but lose your job, you'll still need to make those payments. Once you build your security, think of the mortgage as the cash side of your investing, i.e. focus less on the relatively low rate of return (4.3%) and more on the eventual result, once paid, your cash flow goes up nicely.   Edit - in light of the extra information you provided, your profile reads that you have a high risk tolerance. Low overhead, no dependents, and secure employment combine to lead me to this conclusion. At 23, I'd not be investing at 4.3%. I'd learn how to invest in a way I was comfortable with, and take it from there.  Disclosure (Updated) - I am older, and am semi-retired. I still have some time left on the mortgage, but it doesn't bother me, not at 3.5%. I also have a 16 year old to put through college but her college account i fully funded." From what I hear, usually not.  Get an amortization schedule for the property, and see what the savings on the interest rate is.  Then see what the interest versus borrowing less is. The consider that you can invest the buy down money, or better yet use it as down payment and borrow less money.  Typically (as experienced by wife who use to be a loan processor) the buy down did not save any money, and just made the broker a bigger commission. One of my university professors suggested doing this systematically to get access to shareholder meetings where there is typically a nice dinner involved. As long as the stock price + commission is less than the price of a nice restaurant it's actually not a bad idea. "The short answer is that the exchange of the stock in exchange for the elimination of a debt is a taxable exchange, and gains or losses are possible for the stock investor as well as the bank.   The somewhat longer answer is best summarized as noting that banks don't usually accept stocks as collateral, mostly because stock values are volatile and most banks are not equipped to monitor the risk involved but it is very much part of the business of stock brokers.   In the USA, as a practical matter I only know of stock brokerages offering loans against stock as part of the standard services of a ""margin account"". You can get a margin account at any US stock broker. The stockholder can deposit their shares in the margin account and then borrow around 50% of the value, though that is a bit much to borrow and a lower amount would be safer from sudden demands for repayment in the form of margin calls. In a brokerage account I can not imagine a need to repay a margin loan if the stocks dividends plus capital appreciation rises in value faster than the margin loan rate creates interest charges...  Trouble begins as the stock value goes down.  When the value of the loan exceeds a certain percentage of the stock value, which can depend on the stock and the broker's policy but is also subject to federal rules like Regulation T, the broker can call in the loan and/or take initiative to sell the stock to repay the loan.   Notice that this may result in a capital gain or loss, depending on the investor's tax basis which is usually the original cost of the stock.  Of course, this sale affects the taxes of the investor irregardless of who gets the money." You say you are underwater by $10k-15k.  Does that include the 6% comission that selling will cost you?  If you are underwater and have to sell anyway, why would you want to give the bank any extra money?  A loss will be taken on the sale.  Personally i would want the bank to take as much of that loss as possible, rather than myself.  Depending on the locale the mortgage may or may not be non-recourse, ie the loan contract implies that the bank can take the house from you if you default, but if 'non-recourse' the bank has no legal way to demand more money from you. Getting the bank to cooperate on a short sale might be massively painful.  If you have $ in your savings, you might have more leverage to nego with the bank on how much money you have to give them in the event the loan is not 'non-recourse'.  Note that even if not 'non-recourse', it's not clear it would be worth the banks time and money to pursue any shortfall after a sale or if you just walk away and mail the keys to the bank. If you're not worried about your credit, the most financially beneficial action for you might be to simply stop paying the mortgage at all and bank the whole payments.  It will take the bank some time to get you out of the house and you can live cost-free during that time. You may feel a moral obligation to the bank.  I would not feel this way.  The banks and bankers took a ton of money out of selling mortgages to buyers and then selling securities based on the mortgages to investors.  They looted the whole system and pushed prices up greatly in the process, which burned most home buyers and home owners.  It's all about business -my advice is to act like a business does and minimize your costs.  The bank should have required a big enough downpayment to cover their risk.  If they did not, then they are to blame for any loss they incur.  This is the most basic rule of finance. Your back of the envelope calculation shows an income of about 5.5% per year, which is much better than a bank. The risk of course is that in a few years when you want to sell the stock, the price may not be at the level you want. The question is what are you giving up with this plan. You have 80K in cash, will cutting it to 30K in cash make it harder for your business to survive? If your income from the business starts slowly, having that 50K in cash may be better. Selling the stock when the business is desperate for money may lock in losses. "Here's a link to an online calculator employing the Discounted Cash Flow method:  Discounted Cash Flows Calculator.  Description: This calculator finds the fair value   of a stock investment the   theoretically correct way, as the   present value of future earnings. You   can find company earnings via the box   below.   [...] They also provide a link to the following relevant article:  Investment Valuation: A Little Theory.  Excerpt: A company is valuable to stockholders   for the same reason that a bond is   valuable to bondholders: both are   expected to generate cash for years   into the future. Company profits are   more volatile than bond coupons, but   as an investor your task is the same   in both cases: make a reasonable   prediction about future earnings, and   then ""discount"" them by calculating   how much they are worth today. (And   then you don't buy unless you can get   a purchase price that's less than the   sum of these present values, to make   sure ownership will be worth the   headache.)   [...]" If your mortgage interest is tax-deductible, it's generally a bad idea to pay down the principal on the mortgage because you'd be losing the tax deduction. You could instead invest it in a tax-free municipal bond fund, especially if you're in a high tax bracket (including state and local marginal tax rates). For example, if you have a 5% rate mortgage on your home, you could invest in a 3.5% municipal bond and still come out ahead when you apply the tax deduction to your income at a 44% (33% federal + 7% state + 4% city in NYC) marginal tax rate. "This is the best tl;dr I could make, [original](http://www.imf.org/en/Publications/WP/Issues/2017/06/09/ABBA-An-Agent-Based-Model-of-the-Banking-System-44916) reduced by 60%. (I'm a bot) ***** &gt; The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.  &gt; A thorough analysis of risks in the banking system requires incorporating banks&amp;#039; inherent heterogeneity and adaptive behavior in response to shocks and changes in business conditions and the regulatory environment.  &gt; ABBA is an agent-based model for analyzing risks in the banking system in which banks&amp;#039; business decisions drive the endogenous formation of interbank networks.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6gegcw/imfabba_an_agentbased_model_of_the_banking/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~140832 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **banks**^#1 **IMF**^#2 **risk**^#3 **view**^#4 **author(s**^#5"