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Hi Chuck,


1. What is the APR of the mortgage?

2. Does it have PMI?

3. What is the average annual return of the portfolio?

If you have PMI, you should be able to have it dropped if the balance is low enough.

If the capital gains are what is concerning you:

Sell some of the stock and buy it back. You will pay the cap gains now and raise your basis for future sale, lowering taxes then.

You can piece-meal small sales anytime, as long as you don't take a loss and repurchase the same stock. If you sell a loser in your taxable , do not buy the same or similar again for at least 31 days, before or after in any account.

"Money location: One of the big risks we realized we had during the financial crisis was that while we have a decent invested net worth, nearly all of it was tied up in retirement accounts"

You also note that IPIG is a significant portion of your non-retirement money. This a BIG reason to NOT WASTE IT PAYING OFF A MORTGAGE! (Sorry for shouting. It just gets me excited ...)

Based on what I mentioned above, you can choose time to sell some stock, etc to bolster your cash cushion. Based on what I glean from this post and others, you should have 1 to 2 years of your full living expenses in cash/cash-like holdings outside of your portfolio.

The cushion feeds your checkbook. Selective sales plus interest/dividends will keep it topped off. Sell stock when prices are good.

"Disposing" of all your accessible capital is not a good idea.

Does that help you?

All holdings and some statistics on my Fool profile page

PS: I have a similar issue using capital. We bought some land, will move out of state, build a new house and sell the old place. I could have stripped our taxable account plus withdraw the entire amount from Roth.

Instead, I took a mortgage on the land and will pay bills as due from cash I still hold in Roth. If this place sells, I will use that cash for the remainder of the building phase. I may of may not pay-off/pay-down the mortgage with the rest.
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