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Right of rescission gives borrowers the right to cancel a loan. If this right is exercised, then any fees they have already paid will be refunded in most cases.

Rescission Period

If a borrower chooses to enact this right of rescission, they must do so within 3 business days. They are generally entitled to a refund of any closing or other costs associated under the loan terms, except in certain situations such as “commitment fees” when are generally non-refundable.

Most people don’t realize that in situations such as this, Saturday will count as a business day, though Sunday is not. There are some restrictions as to how and when this right can be exercised.

Right of Rescission Restrictions

There are some instances where a right of rescission will not be permitted:

• The house must be your primary residence or the rescission will not be permitted.
• Read the fine print on your state government loan. There is generally no rescission period allowed on these loans.
• You will not be given this right of rescission every time you refinance. This only occurs under certain circumstances.

When you go to the table to sign the closing papers, everything will be spelled out to you in detail, including the time period you have, if any to exercise the right of rescission. Read everything carefully as you are the one ultimately responsible for knowing this information and the exact dates involved, but generally speaking, you have until Midnight of the third business day to exercise the right.