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  • Writer's pictureYuri Kapilovich, CPA

The Basics of Residential Mortgages



As you may or may not know, I released a new YouTube series called The Capital Contribution Live. The aim of this show is to teach you the basics of things you should have learned in high school and college.


On Monday, 10/17 I released the first episode of the series called "The Mortgage" and we got to sit down with Matt Schofield who is a Mortgage Loan Officer with NJ Lenders Corp. We chatted about the basics and here is a summary of what we discussed:


What documents are needed for a mortgage?


  • It all depends on your financial situation and the sources of income that you have. Typically, for a household with 2 employed members, those documents would require prior year tax returns, W-2s, bank statements.

  • If you are self-employed, you would need to be self employed with at least 2 years of self-employed tax returns to be able to utilize that income towards your home.

What is the difference between a fixed term mortgage and an Adjustable Rate Mortgage (ARM)


  • A Fixed term mortgage is fixed for a certain period of time (10, 15, 25, 30 years) and the mortgage payment (principle and interest) will not change for the duration of that entire time unless you refinance.

  • An ARM (Adjustable Rate Mortgage) has both a fixed and a variable (changing) component to the mortgage schedule. Typically you find a 3/1, 5/1, 7/1 and 10/1 ARMs and what that means is that for the first 3, 5, 7 or 10 years the payments of interest and principle will be the same and on the following year after that it may change.


Here is a link to the episode: https://www.youtube.com/watch?v=-aoJ7KiTp_0


If you have questions about anything in this episode reach out to Matt Schofield at matt.schofield@njlenders.com


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