Reply to Mortgage recast vs extra payments

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[quote=Anonymous]maybe to phrase the numerical argument a bit differently, the mortgage backed securities index, which consists of $7.7 trillion outstanding of mortgage backed securities (this is where all your conforming mortgages live), has a weighted average coupon of 2.94% and trades for $86.5 / $100. For anyone who pays a dime more than they need to on their mortgages, that person is saying "I would like to buy this thing that the market has said is worth $86 for $100". the "pay it off" types tend to be frugal savers, but in this respect they are making an illogical luxury purchase based on emotion. If someone said they bought a car at a dealership that was listed for $40,000 for $48,000 to "feel good", most would consider that person insane. There's some tax / financial aid considerations, but it's still amazing to me that some folks are trying to prepay (in any way) in the current environment.

So if you have a $1mm mortgage, it's worth $850K. If you prepay, you are basically saying "$150K is not worth much to me" (or if you prepay 10%, $15K)
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