The Smiths were just approved for a 25 year mortgage at an 11% fixed rate. If they had not filed bankruptcy in the past, they could have gotten a rate of 7%. If their loan amount is $128,000, how much more per month will the Smiths be paying for their mortgage as a result of their bankruptcy?

Use the fixed-payment mortgage formula, with monthly interest and 300 payments (25 × 12). For $128,000 at 11%, the monthly payment is about $1,254.54; at 7%, it is about $904.68. The difference is about $349.86 per month, so the correct choice is $349.86.

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