the way it works is that any 'new' debt must be used to substantially improve your home.
so the $50,000 is just replacement of debt - it remains tax deductible (assuming the balance is lower than when you first purchased the mobile home).
the $25,000 of home improvement is tax deductible
the $25,000 to pay off the car loan is not deductible.
The IRS doesn't care whether it's a HELOC for a cash out mortgage; the math is the same
So $75,000 would be 'tax deductible' debt and $25,000 would not be. As you pay down this $100,000 mortgage, the IRS assumes the non-deductible portion is paid down first, so over time, the percentage of interest that is deductible would keep going up.
