To answer first the issue of the loan being transferred to different Lenders, no, this is common and does not change the interest that can be claimed on the loan since the purpose of the loan was always to purchase the home, no additional cash was borrowed.
Since the new loan was established after the first loan (on the prior home) was paid off, you should be able to enter the Form 1098 from both loans and the program should be able to handle the balances if neither balance was over the limit.
For example, if the loan on the first home was 400,000 and the new loan is 500,000, the program will acknowledge that the balances never exceeded the limit.
TurboTax DOES NOT average by month, if that is an issue for you (such as if for only two months your mortgage balance was over the limit, so you want to average) you will need to make that calculation on your own and edit the interest in the program. This is done in the TurboTax program on a screen provided towards the end of the interview when the program suggests limiting the interest and you wish to over-ride that.
You will enter the oldest form first and indicate that it was paid off, date paid off etc.
Next, enter the Form 1098 for the new loan. Since you say you have several forms because the loan was transferred to different Lenders in the same year, you might enter the forms for the new loan as if it was reported on only one Form 1098, using the oldest origination date with largest loan balance and then most recent ending loan balance as well as adding the interest and entering Points if applicable. You don't NEED to consolidate the Form 1098's that you received for the new loan, but it might make the entry process easier.
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