In addition to what has been discussed, the real problem I see that you need to address, is how will the proceeds from the mortgage be used?
You need some advice and understanding on the interest tracing rules depending on how the funds will be used.
You should seek some guidance from a tax professional since Section 1031 and the interest tracing rules can be tricky.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
