When inputting the 1098 for the "1st mortgage", enter "$1" as the "Outstanding mortgage principal" amount (Box 2). This will keep the program from averaging the two mortgage balances and concluding you owed more that you actually did at any given time.
This will not have any effect on your tax calculation and will not generate an error in either TurboTax or with the IRS, From an economic perspective, it is accurate - you owed virtually nothing on this mortgage at the end of 2020. (The program will not accept a "0" or a blank in this field).
See What do I do if I have multiple 1098s from refinancing my home debt? for a more detailed discussion of this issue.