You plan to purchase a house for $650,000 using a 30-year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price, in this case, equal to $130000. Thus, the mortgage loan amount will be $520000. Your bank offers you the following two options for payment:

• Option 1: Mortgage rate of 3.6 percent per year and zero points.
• Option 2: Mortgage rate of 3 percent per year and 1 points.

Which option you should choose and why? Please show calculations and formulas.