Several clients have refinanced their homes this year. The new mortgage is the balance of the old loan AND the refinance costs. This method results in a new balance that is higher than the old loan balance. My question is: does this method result in non-deductible mortgage interest because the new loan balance is higher than the old loan balance? I been searching for an exception of the old balance and new balance being an exact match and can't find it. Am I missing something or do I have to treat the refi costs as generating excess interest?