Interest on home equity debt is tax deductible for loans which are the lesser of $100,000 or the equity in the home (the difference of the fair market value of the home and the current acquisition debt).

If you file a married filing separate return, the $100,000 figure above is replaced by $50,000.

There are rare exceptions to this for old loans or homes with acquisition debt in excess of $1 million. See IRS Pub 936.

Also note, the interest would be added back for AMT purposes.

Yes, as long as the principal on both loans does not exceed the value of your home.

In most cases, yes. There are a few home equity loans that fall outside the tax deduction guidelines, but these are few. When getting the equity loan, check with the loan officer or someone at the loaning company to verify the interest is deductible.

Yes.