see if this post helps....someone else had a similar question earlier tonight
https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-deductible-home-mortgage-inte...
your 12 point average is the way to go.... i try to explain the Mr. Blue example in pub 536......
just take the interest on each mortgage and divide back by its respective interest rate... do not adjust for the number of months the mortgage was outstanding. THAT is the balance you use as the 'average balance' for each loan - you should get a result that is very similar to how you laid out the 12 point average
