Is it ok to have a 30 year fixed
True? The 30 year fixed is the option most borrowers are choosing as rates continue to remain at all time lows. Are you considering something else?

Can I refi without PMI
There may be on option to refinance the first for a lower rate, but the second could not be included and would have to remain in place. You should talk with your current lender about a HARP refinance which allows for a loan to value in excess of 80% and would not have PMI if you do not have it now.

How do lenders pick which credit score to go with when 2 people are applying?
Lenders will use the lowest mid score of all borrowers. The credit report will show 3 FICO scores for each borrower and the lowest mid score for either borrower is the one the loan approval and cost will be based on. ex: (Husband 650-678-699, Wife 699, 702, 705, - score used 678). It will not be based on who...