Three-Day Right of Rescission Period
What Is the Three-Day Right of Rescission Period?
The right of rescission, created by the Federal Truth in Lending Act, gives homeowners the absolute right to cancel a mortgage refinancing transaction until midnight of the third day after closing, excluding federal holidays and weekends. The right of rescission applies to refinancing transactions of primary and secondary homes, but does not apply to a purchase transaction.
How to Exercise the Right of Rescission
If you are refinancing your mortgage and decide you want to cancel or rescind the contract, your 3-day right of rescission period will begin once the initial closing occurs.
How is the Right of Rescission Period Calculated?
The rescission period runs for three business days after your closing occurs. Business days include all days of the week, besides Saturday, Sunday, or a federal holiday.
Example of a right of rescission period:
If loan documents are signed at closing on Monday, the rescission period begins Tuesday at midnight and ends Thursday night at midnight. On Friday morning the loan could then fund and the transaction completed.
Summary
Be aware of this required process, and understand that the initial closing day is not the date that your transaction will be funded and completed if you are refinancing and three-day right of rescission applies to your transaction.