Neither. The interest, whether it is from the contractor or a bank, would not be deductible since it is on a home OTHER than the home that the loan secures. In order for interest to be deductible, it has to be used to buy, build or substantially improve the home that secures the loan.
Since you are using this loan to build a NEW house and the loan is being used to build a NEW house, the interest wouldn't qualify as deductible regardless of whether or not it is a HELOC or Refinance. So you would not enter this on your return.
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