The issue is if you borrowed money by using your house as collateral, but didn't use the funds borrowed to pay off the prior mortgage or for improvements to the house, then a portion of the loan interest is not tax deductible.
It may not have affected your tax because you probably don't use your mortgage interest as a deduction, since you probably take the standard deduction of $24,800 for most married-joint filers. Unless you have enough itemized deductions to get over the $24,800 standard deduction, you do not deduct your mortgage interest on your tax return.
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