Mortgage Confusion

[PharmBoy38]

We have a confusing mortgage situation this year and I'm worried I'm going to mess something up.  So we had our mortgage on our home.  During this last year we refinanced and took some cash out with our same mortgage company.  Then, almost immediately the mortgage was acquired by a different bank, so I have 3 1098 forms.  Do I just enter all 3?  Also, on the 1098, on the 2 mortgages that no longer exist, they still have outstanding mortgage principle listed in box 2.  Are those not supposed to read zero since they were refinanced / sold away?  Or is that not related to the ending balance?

[AnnetteB6]

You will enter all three 1098s into your return.  You should enter them in order from the oldest loan to the newest.

For the oldest loan (the one that you had at the beginning of 2019), enter the outstanding balance as shown on your 1098 (box 2).  Then for the refinanced loan with the same company, leave the outstanding balance blank when you enter the 1098, since this loan originated after January 1, 2019.  

[PharmBoy38]

Thank you, this was helpful.  I have an additional question related to this though.  So the cash we took out on that loan is confusing me now.  So we didn't use any of the cash we took out on the home.  So when it asks if we used the money exclusively on this home, I answer "No, I used some of all of this loan on a different home or on something other than a home".  This leads to the page asking how we used the loan.  The first is easy, we haven't used any on the home.  Then it asks original balance of the loan.  Is this the full qty of the loan that we took out including the cash out?  Then it asks what was the balance of the morgage on Dec 31, 2019, which again is confusing me since the loan was sold to a different company after. So do I mark that as zero? And do I mark it paid off during 2019?  Then on the sold loan with the current company I assume I"m going to enter all this again, but with the difference being the original balance being ever so slightly less due to 1 payment being made to the original company, and with that loan I will have a balance Dec 31st.  

[RobertG]

Yes, you mark the balance of the loan on 12/31/19 as zero.  

Then you enter the third loan with the original balance being slightly less.

The third loan is not a refinance.

[PharmBoy38]

So just to double clarify:

original loan - no current issues with how it was entered in the program

then

refinanced loan - this one we now are marking as balance zero at the end of the year.

then

my refinanced loan was sold to another bank - so I don't mark this as a refinanced loan?  I click the button which says "yes, this is the original loan I used to buy or build my home"?

[DianeC958]

For the original loan you enter the 1098 exactly the same way it shows on the form you received.

For the refinanced loan in Box 2 it is asking the balance due for this loan as of 01/01/2019.  This loan did not exist so the amount should be $0.

The 1098 for the loan being sold for Box 2 the amount also is $0 because on 01/01/2019 this loan did not exist.

Yes, for the 1098 you received from the company that purchased your loan you mark it as the original loan you used to buy or build your home.

By entering the information this way you will have all of your mortgage interest show as deductible as long as your principal balance in below $750,000.