I was actually thinking the same thing for myself (similar situation with PMI). But there is one additional danger with 401K loans. If you lose your job or quit, your loan is due within 60 days. Otherwise it is counted as an early withdrawal, so you owe a 10% penalty to the IRS, plus you get to pay taxes on the loan balance.
Also, check with your bank -- in my case, PMI will automatically stop at 78%, but once you get down to 80% you can initiate a request to remove PMI. Another option is if the housing market has improved, your house has more value. So if you are at least one year into your loan you can go through a refinance process where your PMI loan to value is assessed based on the current market value of your home. But again this can backfire, as the market value is based on the appraisal that the bank does. So you will have to make sure your house is in shape to sell to get a good appraisal.
Also, check with your bank -- in my case, PMI will automatically stop at 78%, but once you get down to 80% you can initiate a request to remove PMI. Another option is if the housing market has improved, your house has more value. So if you are at least one year into your loan you can go through a refinance process where your PMI loan to value is assessed based on the current market value of your home. But again this can backfire, as the market value is based on the appraisal that the bank does. So you will have to make sure your house is in shape to sell to get a good appraisal.