1. A home buyer is considering applying for a loan to buy a house. The asking price of the house is $200,000 and the buyer is thinking of borrowing $180,000 for a period of 30 years (loan repayments are monthly). The following are the two choices available:
2. A fixed rate loan for 30 years with an annual interest rate of 6%.
3. If the home owner is willing to pay an additional 1% of the loan amount at the time of borrowing the money, lender will reduce the interest to 5.9%. (This will effectively make the loan $181,800)

Which of the two choices is better for the home buyer?