Thank you so much for the clear and thorough explanation. I followed the process you described, and although there were a few minor differences (for example, I did enter the points we paid on the new home that appeared on the 1098, and I was never asked to enter the outstanding loan balance), it nonetheless appeared to correctly calculate the mortgage interest with this method and allowed me to itemize my deductions, yielding a much larger refund. I sincerely hope that future versions of TurboTax will be updated to accommodate this very common tax scenario to make the process less difficult, but I'm glad we were finally able to resolve this and file.
