Average mortgage balance

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Publication 936 – Average mortgage balance

There are different ways to calculate average mortgage balance which all get you back to about the same place. 

Below is the wording in the section using statements provided by your lender to calculate average mortgage balance. I can see from the second paragraph that obviously you calculate the average balance by dividing the monthly mortgage balance by the number of months in the year that the mortgage was secured.

MY QUESTION: Why does the first paragraph state that you can treat the balance as zero for any month the mortgage wasn't secured by your qualified home. This has some people believing that in the first year of a mortgage they can divide their monthly balances by 12, even if they only had the mortgage for a partial year. This would help them significantly in the calculation of allowable interest.

Does anyone know why the “treat the balance as zero” is in the first paragraph and what that sentence means??????

Statements provided by your lender. (FROM PUBLICATION 936)

If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. You can treat the balance as zero for any month the mortgage wasn't secured by your qualified home.

For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year.

If your lender can give you your average balance for the year, you can use that amount.