re: Dilemma in trying to get rid of PMI while searching for a new home

quote:

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Is it smarter to save that $150 every month and put in a separate account to make sure I have 20% for house #2 and avoid FHA and PMI payments?

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I think so.

If you pay extra principal on the current home, the value of that home could go down and wipe it out. Or you may need to close on the new home before you can sell the old one and access that extra principal.

Putting the extra money in an account, which can easily earn 2% FDIC insured, avoids those issues and could pay off huge if it allows you to make a big enough down payment to avoid PMI for years of notes on the new house,