Future Advance


DEFINITION of 'Future Advance'

A clause in a mortgage which enables the lender to advance funds after the loan closing. The initial agreement of the loan remains intact in that no additional collateral is required, and no refinancing is necessary. Future advance can refer to a variety of loans such as home equity loans, construction loans and commercial loan advance mortgages where the amount of the loan has not been fully used at the time of loan closing.

BREAKING DOWN 'Future Advance'

A future advance is most commonly used with regards to construction work. Contractors are often paid on a schedule as the work is completed, with a portion held until all work is finalized, and with the building being built used as collateral.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  3. Lien

    The legal right of a creditor to sell the collateral property ...
  4. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  5. Construction Loan Note - CLN

    A short-term obligation in the form of a note, used for the funding ...
  6. Closing

    The end of a trading session. The closing of a trading day halts ...
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    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
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    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
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