What is the right of rescission on a refinance or second mortgage?

The CFPB says that after closing, you may be able to cancel certain mortgages that were not used to buy the home. That cancelation right is the right of rescission. It generally covers non-purchase-money loans such as refinances and home-equity loans. A mortgage used to purchase the home is typically outside this right.

The Bureau describes a three-business-day window. Saturdays count as business days; Sundays and legal public holidays do not. The clock does not start until you have signed the credit contract, usually the promissory note; received an accurate Truth-in-Lending disclosure, which in most cases is the Closing Disclosure; and received two copies of a notice explaining the right to rescind. Written notice must be delivered or mailed by midnight of the third business day. A phone call or visit is not enough.

If you refinance and then rescind, the original loan remains. The CFPB also says that if required disclosures or notices were missing or certain important disclosure mistakes were made, a longer cancelation period of up to three years may apply; that situation calls for legal advice. This is general information about the cooling-off right as the Bureau describes it, not advice about a particular closing.