Is your concern only that that mortgage worksheet has the refi box checked for the original mortgage? Are you getting the interest deduction you expected? If so, I'm thinking the box is checked so that the program will treat it as a refinance to avoid calculating the interest as if you had two separate mortgages on your home; a mortgage plus a HELOC for example. The mortgage balance averaging and interest deduction calculation are the same for a refinance as for a mortgage transfer.
