What is the Right of Rescission Notice for a Mortgage Refinance?

What is the Right of Rescission Notice for a Mortgage Refinance?

Currently interest rates for mortgages are at an all time low which is enticing a lot of homeowners to refinance their loan. There are a lot of good deals out there. After signing all of the paperwork a borrower is most likely going to have a lot of paperwork to look over. Some where buried within all of that paperwork is the right of rescission notice.

Whenever someone refinances their mortgage loan they are by law given three business days to look over all of their paperwork, including the terms and agreements to see if they want to go through with this particular loan agreement. The rescission period starts the day after the loan documents have been signed and it extends for three business days with Saturday counting as a business day but not Sunday. Therefore if someone signs mortgage documents on Friday, the rescission period starts on Saturday and ends on midnight of the third business day, which in this case is Tuesday. The first day of the rescission period is Saturday and the next is Monday and finally Tuesday.

If they decide they do not want to refinance then they have to sign the right of rescission notice at the bottom and return it to the lender prior no later than the third business day by midnight. If the rescission notice is not received then the loan becomes official and the bank or financial institution will send the mortgage deed or document to the country recorders office to be filed. They new terms and agreements will go into affect and the old terms and agreements will become null and void.

You have to understand that every single mortgage transaction is not subject to a right of rescission notice. If you are refinancing your mortgage there is a right of rescission notice but as the owner you must be living in that home that is being refinanced. Others who have investment properties that they wish to refinance don’t have the luxury of a rescission notice. Even if you are purchasing your home there is no 3 day rescission period but later on if you decide that you want to refinance and you are the owner living in that property then this option will be available for you.

If someone has a home equity line there is a three day rescission period for the amount of cash that the borrower is receiving but not for the entire loan or the entire credit line. The rescission can apply to the home equity loan entire credit line if, once again, the owner of the property is living in that home.