<prompt> Human: Hi PersonalFinance, My SO and I just sold our home and took home about 95,000. With that we paid off all out debt minus student loans we will be able to take advantage of the 10 year government loan forgiveness scheme - so not be aggressive with it and one car. Once it was all paid off we have about 60,000 left. We just put an offer in on a new house 290,000 about 600 a month less than we were paying. I spoke to the mortgage guy this evening and have a couple different options:8020 - 80 fixed over 30 years, 20 variable line of credit which is fixed for 10 years, then variable on the 11th. I do not like the idea of anything variable, but I could put 20 down and then have minimal savings and not have a variable portion but still have access to it if need be. The variable rate is 2prime. I dont like the idea of trying to beat the scheme and planning to have the 20 down by year 10, as I have already learned the best laid plans never work out. The other is 5 down, 30 year fixed at 3.8. I like this, for 2 reasons. I can afford to make a minimum of 13 payments per year and reduce my mortgage length by 10-15 years. After the 5 down, I still have 6 months of savings. The one thing I am not sure on is PMI. Our credit scores are approximately 750. With student loans we are about 35-40 debt to income, which I can reduce with paying off the other car. When we got a mortgage on our first house, PMI was a never new concept and our finances were not as good as they are today and we did not need it, so I am surprised it is being bought up today. I was given two options, pay 1.5 for the PMI at closing about 5,000 or they can increase the rate to 4.2 which is about 1,000 a year, or 30,000 over the term of the mortgage and I have no PMI. Am I just being gouged for money? Is this like baggage on the airlines, where it is basically a fee that has no become the norm of business? I presume I would be better paying the 1.5 at closing?I am speaking to two mortgage companies, how do I get them to battle. Do I give all my information to both of them and allow them to use my credit and hold onto the battle till the last minute?My main goal is to have a decent mortgage and hold onto my savings. Until we sold our last house, we had large amounts of credit card debt and no savings, so the idea of no credit card debt, and 6 months brings joy to my heart.THANKSAssistant: PMI is an insurance policy for underwriters in the event that the market tanks and they cannot get their money out of your house. The smart move is to get a 30 year fixed and put 20 down. Then you wont have PMI.When they say they increase your rate and you pay no PMI, one of two things is happening: 1 they are rolling your PMI into your loan, or 2 they are just recalculating PMI as if it was additional interest. Either way you pay it.You also dont pay PMI over the whole mortgage. Only until you get to 80 loan to value. If you do nothing, it will automatically come off once you get to 78.Once you get to 80 LTV, you really dont need to accelerate your mortgage payoff. Interest under 4 is basically free money, and you can do better than 4 with a high-yield checking account.Also, dont forget about closing costs. They run about 10k.Human: So you would use all your savings to put 20 down? Why?  <response>: PMI in no way protects you, by having it you are paying for insurance for the banks investment. It can be good if youve got a good way to get a high rate of return on keepinginvesting that money now but most people cant realistically do that, so by putting the most down when you close you will save yourself more money in the long run. Most people who have PMI end up kicking themselves in the head later when theyre paying an extra 100 each month with their mortgage payment from which they dont benefit long term. The ONLY benefit is you pay less out of pocket at closing, which can be worthwhile for a few people. If you do nothing, it will automatically come off once you get to 78.This is a common misconception. PMI comes off automatically when the loan is first scheduled to reach 78 LTV based on your original amortization schedule. This means paying extra towards your Unpaid Principal Balance does nothing to accelerate auto-termination.If your house appreciates in value, andor if you pay a substantial amount down towards your UPB over the next couple years you can request PMI removal from your mortgage servicer relatively easily. The worst that happens is you have to pay 400 for a new appraisal when the time comes if your servicer is really a stickler for the rules.Sources: the FNMA Servicing Guide Most banks will default to this unless youre going with an in-house credit union and the loan will stay with them.I am also a mortgage bankerEdit 1: a phrase 