Can I change my mind after I sign the loan closing documents for my second mortgage or refinance? What is the "right of rescission?"
Yes. For certain types of mortgages, after you sign your mortgage closing documents, you may be able to change your mind.
You have the right to cancel, also known as the right of rescission, for most non-purchase money mortgages. A non-purchase money mortgage is a mortgage that is not used to buy the home. Refinances and home equity loans are examples of non-purchase money mortgages.
This right gives you three business days to cancel a non-purchase money mortgage agreement. In this case, business days include Saturdays, but not Sundays or legal public holidays.
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
If you decide you want to rescind a non-purchase money mortgage:
- You must notify your lender in writing that you are cancelling the loan contract and exercising your right to rescind. You may use the form provided to you by your lender or a letter.
- You can't rescind just by calling or visiting the lender.
- Within 20 calendar days after your lender receives your notice of rescission, all money or property you paid as part of the mortgage transaction must be returned to you.