Law Commons^™

Rethinking Future Advance Mortgages: A Brief For The Restatement Approach, Dale A. Whitman, Grant S. Nelson

Faculty Publications

The advantages of such arrangements, under which the mortgagor takes none or only a portion of the loan at the outset but receives the balance in the future, are substantial. The mortgagor saves interest on the unadvanced portion until it is needed and avoids the need to invest this portion at an interest rate that at least equals the rate being paid to the lender. Moreover, both parties avoid the expense and paperwork inherent in refinancing the initial loan or in executing a series of junior mortgages to secure each advance. Finally, in the construction loan context, before committing large …