I have a client (joint filing) with two mortgages, current balances are primary- $300k and secondary- $600k, both originated in 2014 ($1 million grandfather clause applies). He would like to refinance both mortgages in 2018. Does the IRS look at each mortgage individually in regards to the interest rate deduction on Schedule A? 

For example:

If he refinanced his primary to $350k through a cash-out refi and refinanced the secondary to a total of $550k, the IRS would view the $50k increase to the primary mortgage as a $50k home equity loan, right? Despite the total debt staying the same.

Based on the Pub. 5703, it appears they would look at each qualified debt individually. If either mortgage is larger after refinancing, the difference would be considered a home equity loan subject to the new $750k limit (reduced by the total grandfathered debt), even if the other debt was reduced to keep the total debt level the same. Just want to hear other interpretations.