Question:
1. Should we pay off our mortgage or not?
I’ve been debating about this for long time. Should we pay off the mortgage and be done with it or keep investing and hopefully in 7 years we will double our investment in taxable account. Market is close to all time high and I am thinking why not cash it out and pay off our mortgage. I understand I will have to pay taxes on capital gains. My right side of the brain keeps telling me: let it be and let it grow

We live in decent neighborhood in Bay Area and school is 8min walking distance. My oldest one just started going to school. We are not sure if this is our forever home but we really like our neighborhood and neighbors. Hopefully things will not change. We've lived here for 5 years now and we love our house.
My job situation is pretty stable, I am working for a Mega Corp & I want to believe that I will have this job for next couple of years but you never know

Base Salary $155k. This year bonus was exceptionally strong, almost doubled my salary. Usually Bonus is between 10-20% of my salary.
Emergency funds: six+ months of expenses
Debt:
• Mortgage - $392K – interest rate 3.375%
• Credit cards ~4k – paid off monthly
• No other debts
• His car might have to be replaced soon. Its 11 year old, 92k miles but it runs fine without any issues
Tax Filing Status: Married Filing Jointly
Tax Rate: 33% Federal, 10% State. This year my earnings are really good, usually I am in lower tax bracket.
State of Residence: CA
Age: 45
Married, 3 kids. Ages 5, 3 and 2 weeks . DW is full time mom.
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 10% of stocks
Current retirement assets
Taxable
$300k – Vanguard
$100k – Savings (AMEX)
His 401k
$480k
His Roth IRA at Vanguard
$100k
Her Traditional IRA at Vanguard
$45K
Each Kid has a 529
5 year old – $23k
3 year old - $18k
Newborn - $11.5k
Contributions
New annual Contributions
$18k his 401k (6.5% match)
$5500 his Roth IRA
$7000 his Mega back door IRA
Contributing to ESPP 10%
Home worth estimate per Zillow is $1.3MIL. Houses around me have been selling between $1.2 - $1.45MIL
I really appreciate your wisdom & input.
Thank you and please let me know if you need any additional info.
Thanks,
MisterNo