Well, this is thoroughly confusing. Wayne and Moses, were are you getting your info about the AMT?
Everything I've been reading in the past 24 hours says that interest on a mortgage used to buy, build or improve a house remains deductible under the AMT. Including if the mortgage has been refinanced multiple times. Where you lose the deduction is for a home equity loan that has been used for something other than buying, building or improving the mortgaged home - for example, to pay for a car, credit card debts, etc. I am still not positive how mortgages on second homes are treated, but that's not my concern. I think, but have not conclusively verified, that both first and second mortgages on your house are treated the same - e.g. if you did 80-10-10 financing.
Here's some links, I picked only the ones from CPAs or other tax professionals, as I'm not convinced the popular media or internet bloggers are reliable on this one.
Looks like I'll have to buy Turbotax and run some scenarios, to get comfortable with the answer.
http://www.wipfli.com/Wipfli/Impact_Magazine/Services/Tax/AMTthreat.htm
Watch mortgage interest. The single largest itemized deduction on most taxpayers' returns is the one for mortgage interest expense. AMT does not disallow most of the deduction for mortgage interest, but the rules are different. What AMT does not allow are deductions for interest on loans not used to buy, build or substantially improve a first or second home. That means that interest on home equity lines of credit (HELOCs) may not be deductible under the AMT.
http://www.fpanet.org/journal/articles/2005_Issues/jfp0205-art8.cfm
http://www.aicpa.org/PUBS/jofa/apr2006/ftta.htm
The only mortgage interest eligible for AMT purposes is from a mortgage whose proceeds were actually used to build, buy or substantially improve a taxpayer’s main or second home. If a taxpayer has taken a home-equity loan and used the proceeds to pay off credit card debt, go on vacation or buy a new car, the interest is not deductible for AMT purposes.