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Telvanni - Evil. will reward you with magic spells.
Redoran - Honour, won't reward you anything.
Hlaalu - Business minded, will reward you by money.
I prefer House Telvanni.
Up to you really, if your are mostly magic user stick with the magic. but I say you will still use your weapon to kill enemies. so your choice.
Light armor better because you can carry more stuff in your inventory, long blade does more damage.
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