Hi Scott! Thanks for the answer, but I'm not quite sure how it applies to my situation. I think I see the source of the confusion, so let me explain: The refi hasn't happened yet -- it hopefully will close later this month -- and we bought the house in 2016, so 2017 tax year isn't relevant at all.
Let me give some simplified numbers to get at what I'm asking. Say we right now have $400,000 on the fixed-rate mortgage and $50,000 on the HELOC. As noted, this is all acquisition debt (and yes, I understand that some of the mortgage origination fees from the original purchase of the house are ultimate part of that.)
So, say next week we refi. We don't get any cash out, but there are $5,000 in fees that get rolled into the new loan. So we end up with a new fixed-rate mortgage of $455,000.
My question: is all of our mortgage interest on this new loan deductible going forward? Or do I have to exclude part of the interest (about 2 percent) representing the fees, until the loan balance gets back down to $450,000?
