Q. I am buying a house for $325,000. Priceline.com has obtained me 100% financing at the rate of 6.75% and $235 a month for PMI. Bank of America has proposed a piggy-back loan -- 6.25% for 80% of the loan and 8.5% for the rest. The main thing is, I might get a bonus early next year and hence can pay off the piggy-back loan. What should I do?

A. For most buyers, going with one loan and paying the private mortgage insurance makes the most sense. That's because piggy-back financing worked a lot better when interest rates on second mortgages were 4%, not 8%.

But you are probably an exception, for a couple of reasons.

With Priceline, a 100% mortgage for $325,000 would cost $2,108 per month (principal and interest only) plus $235 PMI for a total payment of $2,343.

The PMI you were quoted is about $100 a month more than we'd expect, but the size of the down payment is a factor in your PMI rate, as is the type of loan and the amount of insurance coverage that your lender requires.

With Bank of America, the primary mortgage of $260,000 would cost $1,601 per month and the second mortgage of $65,000 would cost another $797 (assuming you paid it off in 10 years) for a total of $2,398.

Although your payments are relatively equal, we'd tilt toward the piggy-back financing because that bonus could allow you to pay it off next year, lowering your payments to just $1,600.

Of course you could also give that money to Priceline, building your equity to more than 20% and eliminating the need for PMI. But you'd still be paying half-a-point more on the primary loan from Priceline than from Bank of America.

If you go with Bank of America, make sure your loan is part of its heavily-promoted "No Fee Mortgage Plus" program, which charges no closing costs.