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Can I change my mind after I sign the loan closing documents for my mortgage or refinance? What is the "right of rescission?" Is there a “three-day cooling off period?”

Even after you sign your mortgage closing documents, you may be able to change your mind. With most refinance mortgages, you have the right of rescission. This gives you three business days to cancel the mortgage agreement. If your home loan is subject to rescission, no loan proceeds may be paid out until this three-day period has ended so that you can think about the agreement. This is also known as the "three-day cooling off period."

If you decide you want to rescind the transaction:

  • You must notify your lender in writing that you are cancelling the contract and exercising your right to rescind.
  • You may use the form provided to you by your lender or a letter.

    Tip: Whatever form of written notice you use, make sure it is delivered or mailed before midnight of the third business day.

  • You can't rescind just by calling or visiting the creditor.

Within 20 days after your lender receives your notice of rescission, all money or property you paid so far as part of the mortgage transaction must be returned to you. You must return any money or property that the lender has paid to you or has paid to others on your behalf.

Warning: Your right to rescind doesn't change your obligation to make payments on any of your other loans. It also doesn't change your obligations under a home purchase contract.

Tip: You can rescind within three days for any reason. For example, you may find better credit terms, such as a loan that offers a lower interest rate.

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