Hank, whose adjusted gross income is $100,000, purchases a new principal residence in the current year for $250,000. He borrows $220,000 from a local mortgage company and pays loan origination fees of $1,600. During the year, Hank pays $7,000 of interest on the loan. What is Hank's allowable interest deduction for the year? (SHOW WORK TO ANSWER)

a. $8,600

b. $8,500

c. $7,750

d. $10,100

e. $7,000