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How long do I have to rescind? When does the right of rescission start?

If you are buying a home with a mortgage, you do not have a right to cancel the loan once the closing documents are signed. If you are refinancing a mortgage, you have until midnight of the third business day after the transaction to rescind (cancel) the mortgage contract.

The right of rescission refers to the right of a consumer to cancel certain types of loans.

When does the right of rescission apply in refinancing a mortgage?

If you are refinancing a mortgage, and you want to rescind (cancel) your mortgage contract, the three-day clock does not start until all three of the following events have happened:

  • You sign the credit contract (usually known as the Promissory Note)
  • You receive a Truth in Lending disclosure (in most circumstances, this will be your Closing Disclosure form)
  • You receive two copies of a notice explaining your right to rescind

The first business day after the last of these events counts as day one. For rescission purposes, business days include Saturdays, but not Sundays or legal public holidays. For example, if the last of the above three events occurs on a Friday, and there are no legal public holidays in between, then you have until midnight on the following Tuesday to rescind.

You may use the form provided to you by the lender or write a letter. Whatever form of written notice you use, make sure it is mailed or delivered before midnight of the third business day. Keep a copy and any evidence that it was mailed or delivered on time.

If you did not receive your Truth in Lending disclosure or the notice of your right to rescind, or if they were incorrect, you may be able to rescind your loan up to three years from the date of closing. If you think this situation may apply to you, consult an attorney.