What Are Future Advances?

A future advances clause allows a lender to provide additional funds to the borrower beyond the initial loan amount, all under the original mortgage agreement. This means that any future funds advanced are treated as part of the initial mortgage, preserving the priority of the original loan over subsequent claims or liens.

The idea is simple yet effective: by including this clause, the lender ensures that future payments made to the borrower are protected under the terms of the original mortgage. This protection applies retroactively, meaning the priority status of the mortgage remains intact.

Legal Framework in Florida

Florida statutes provide clear guidelines for future advances. Here are the key points to know:

• Future advances must be made within 20 years from the date the original mortgage was signed.
• The mortgage must specify a maximum principal amount, which covers both the initial loan and any future advances, in addition to interest and other potential costs like taxes.

If these requirements are met, the future advances receive priority over claims by other creditors, lienholders, or subsequent purchasers who are aware of the mortgage. However, an important exception exists for landlord liens, which are not subject to the same rules.

Optional vs. Obligatory Advances

Under common law, distinctions were made depending on whether the future advances were optional or obligatory for the lender. However, Florida’s current legal framework has done away with this distinction, simplifying the process and making it more borrower-friendly. This means that all advances made under a compliant mortgage receive the same protection, whether they were optional or not.

Why Does This Matter?

The future advances clause is particularly valuable for borrowers who anticipate the need for additional funding down the road. It eliminates the hassle of creating new loan agreements or refinancing while providing a safety net for lenders by maintaining the priority of their original lien.

Final Thoughts

Future advances clauses are a powerful tool in mortgage agreements, offering flexibility and security to both borrowers and lenders. By understanding their provisions and ensuring compliance with state laws, such as those in Florida, you can make the most of this feature. Whether you’re a homeowner looking to secure additional funds or a lender safeguarding your investment, the future advances clause is worth keeping in mind.

Mortgages are not just about locking in a home—they’re about unlocking possibilities for the future.

Ormond Beach Mortgage Foreclosure Defense Lawyer

If you’re facing foreclosure on a mortgage, contact Ormond Beach reverse mortgage foreclosure defense attorney Andrew J. Pascale today at 877-667-1211 to discuss your case. Please note that this blog does not provide legal advice and is intended for illustrative purposes only.