Future Advance Mortgage
Definition:
A Future Advance Mortgage is a type of mortgage or deed of trust in which the lender agrees to make additional advances of funds to the borrower after the initial loan closing. The mortgage secures both the current and any future advances under the same instrument.
Future Advance Mortgage Information
Future advance mortgages are commonly used in construction loans, lines of credit, or revolving loans, where funds are disbursed over time as needed. The mortgage specifies conditions for additional advances, interest rates, and repayment terms. These mortgages allow the borrower flexibility to access funds while providing the lender with security for both current and future advances without executing a new mortgage for each disbursement.
Florida Legal Definition
In Florida, future advance mortgages are governed by state real estate and mortgage law, including Florida Statutes Chapter 697 and Chapter 701. Florida courts recognize that the lien created by a future advance mortgage may extend to funds advanced after the initial recording, provided the mortgage instrument clearly describes the security interest. Proper documentation ensures enforceability against the borrower and priority relative to other liens.
How It’s Used in Practice
Lenders, borrowers, and attorneys use future advance mortgages in construction financing, home equity lines of credit, and other loans requiring multiple disbursements. Title companies review the mortgage to ensure it secures both current and anticipated future advances. Borrowers benefit from convenient access to funds without repeated closings, while lenders maintain priority and security over the collateral. Clear terms and proper recording are essential to protect all parties’ interests.
Key Takeaways
- A Future Advance Mortgage secures both initial and future advances of funds under a single mortgage instrument.
- It is commonly used in construction loans, lines of credit, and revolving loans.
- In Florida, enforceability is governed by Chapters 697 and 701, and the mortgage must clearly describe the security interest.
- Borrowers gain convenient access to funds, while lenders retain priority and security.
- Proper drafting, documentation, and recording are critical to protect all parties’ rights.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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