I think the questionnaire is misleading. In the step-by-step instructions you need to enter "0" in the balance if you paid off the loan in 2020 and not the balance on the day you paid it off. I found this by looking at the Home Mortgage Interest Worksheet in the forms section. Toward the end of the form, there's a section called "Home Mortgage Interest Limitation Smart Worksheet. On line E, the outstanding principal as of 12/31/2020 was the same value as the mortgage balance on the day I paid off the loan. When I entered "0" on the worksheet, it corrected the step-by-step. So, either there's a bug where the program doesn't automatically correct to "0" when you give a pay-off date, or, the question shouldn't ask for a balance on the day it was paid off.
