Right of Rescission
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
The right of rescission is a federal three-day window that lets borrowers cancel certain refinances and home equity loans on their primary residence without penalty.
What Right of Rescission means
Required by the Truth in Lending Act, the right applies to most refinances and second mortgages, not purchases. The clock runs three business days after closing, including Saturdays. Funds are not disbursed until the window closes, and canceling unwinds the loan with no cost.
Florida example
A Fort Lauderdale homeowner refinanced on a Wednesday and had until midnight the following Monday to rescind. Because no error surfaced, the loan funded on Tuesday after the rescission period ended.
What it is
The right of rescission gives you three days to cancel certain refinances or home equity loans on your primary home. You can back out with no penalty.
It does not apply to purchase loans.
Why it matters
This right protects you from rushing into a home loan against your residence. You get time to be sure.
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