@Smurfette wrote:
Thanks again @Opus 17. I did not do a cash-out refi - it was just a standard refinance. The "interest paid divided by interest rate method" is described in Publication 936. See below for a copy-paste of the relevant section. My take is that it's a method designed to deal with situations like this, where the mortgage balance needs to be adjusted down to account for the fact the mortgage only covers part of the year. I'm no expert though, so it's very possible that I've misunderstood.
I don't think that method applies to a refinance. You didn't have one loan the whole year, you had two loans each for part of the year. And if you did use that method, the instructions you quoted say to use the lowest interest rate. I will look a little farther.
