The average balance of each loan for the year is obtained by adding the monthly average balances and dividing the total by 12.
To do the calculations, you'll need the monthly balances for each loan.
Please read IRS Publication 936, especially the worksheet on page 12.
You can then check this against the amounts TurboTax calculated on the Deductible Home Mortgage Interest Worksheet and make corrections directly on the worksheet if using TurboTax Desktop.
It can be a bit tricky getting the 1098s into TurboTax correctly. If either mortgage had a balance over $750,000 and you have limited interest, then you do want to enter them separately and let the computer calculate your limits. Otherwise, add them together and use the newest balance.
Click this link for more info on Multiple 1098s.
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