A home equity loan is sometimes and more commonly referred to as a Home Equity Line of Credit, or HELOC. This is where you take out a physically separate loan against the existing equity in your home. It generally has no impact on your original loan.
If you refinanced your home that is not a HELOC.
If you refinanced with a cash out and did not use the cash out money to build, buy or improve your home, then you are limited on the mortgage interest you are allowed to claim. You can only claim the percentage of mortgage interest equal to the percentage of the refi amount, that was used to pay off the original loan.
So if at the time of the refi you owed $50,000 on the original loan, and you refi'd for $70,000 with a $20,000 cash out, that means that only 71.5% of the refi was used to pay off the original loan. Therefore, only 71.5% of the refi loan mortgage interest is deductible over the life of that new loan.
If you later use any of the cash out money to "build, buy, or improve your home" in the future, then that can change the percentage of mortgage interest you can claim in the future. But tracing rules apply to that cash out money to do that.
