Refinance with cash out in 2019, then Dec 2020 refinanced again with no cash out - how to answer questions?

[lcubed2004]

I refinanced in 2019 and took cash out.  I reported this on my 2020 taxes.  

In Dec 2020 - I refinanced to secure a 2% interest rate.  I did NOT take any cash out.  I have a 1098 for 2021 at this bank. 

They then sold my loan to another bank and I have a 1098 from that bank as well.

So two 1098 for mortgage interest 

Question - how to I answer the question on the first refinance Dec 31, 2020 that asks, is this the original loan - NO, is it a refinance YES, did you take cash out (NO - but it is refinancing a loan that I did take cash out on in 2019).  Then the same questions for the new bank that acquired my loan mid 2021. 

How should I be answering this?

Thanks in advance!

[Vanessa A]

You will need to answer yes.  Every year that you report this loan, you will need to say yes and track the portion of the loan, whether you refinance again or not, that is related to the cash out portion.  The reason is, the interest on the cash out portion is not deductible.  So if you paid $10,000 in interest in 2021 and 45% of your loan first refinance was a cash out, 45% of the interest will not be tax deductible.  You would only get a deduction of $5,500 for interest paid, not the full $10,000.  

[lcubed2004]

Thank you @Vanessa A!  That's what I was thinking but the form doesn't really make that clear.