Simple English definitions for legal terms
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A future-advances mortgage is a type of mortgage where part of the loan amount is not paid immediately but at a future date. It is a conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and will become void upon payment or performance according to the stipulated terms.
For example, if a borrower takes out a future-advances mortgage for $100,000, they may receive $50,000 upfront and the remaining $50,000 at a later date. This type of mortgage is commonly used in construction loans where the borrower needs funds at different stages of the project.
The future-advances mortgage allows the borrower to access additional funds without having to go through the process of applying for a new loan. However, it also means that the borrower will have to pay interest on the entire loan amount, even if they have not received all the funds yet.