You will want to enter each Form 1098 separately. The two lenders will both have sent a copy of their Form 1098 to the IRS, who will be looking to match them up with your return and TurboTax will ask if you have another to enter.
When it asks if it is a home equity line of credit (HELOC) or a refinance of a previous loan, please check No.
There was no opportunity to pull out money when the loan was sold, as with a refinance, so there is no need to check for proceeds. When people do pull out additional cash in a refinance, only the amount of the interest for the part of the loan for the house is deductible. That is why there are these questions.
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