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

Even after you sign your mortgage documents, you may be able to change your mind. With most refinance mortgages, the right of rescission gives you three extra days to reconsider whether you want to use your home to guarantee repayment by allowing you to cancel the credit transaction within three business days. If your loan is subject to rescission, no loan proceeds may be paid out until this three-day period has ended. Rescinding a credit transaction means you are canceling the deal. In other words, you decide that you do not want the loan or the service being financed.

  • 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 the creditor or a letter. Whatever form of written notice you use, make sure it is delivered or mailed before midnight of the third business day.
  • You cannot rescind just by telephoning or visiting the creditor.

Within 20 days after your lender receives your notice of rescission, all money or property you paid as part of the credit transaction must be returned to you and you must return any money or property that the lender has paid to you.

Your right to rescind does not change your obligation to make payments on any of your other loans.

TIP: You can rescind the credit transaction within three days for any reason. For example, you may find better credit terms, such as a loan that offers a lower interest rate or does not require the use of your home as collateral.

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