Robert and Judy Parker made the following payments during 2007:

Interest on a life insurance policy loan (the loan proceeds were used for personal use)

$1,200

Interest on home mortgage for period January 1 to October 4, 2007

3,600

Penalty payment for prepayment of home mortgage on October 4, 2007

900

How much can the Parkers utilize as interest expense in calculating itemized deductions for 2007?

  1. $5,700
  2. $4,620
  3. $4,500
  4. $3,600