2 Loan Types that Do Not Offer a Rescission Period

The right of rescission is a right that a borrower has to back out of a loan. The right of rescission, which is required with the refinance of a primary residence under the “Truth in Lending laws,” allows a borrower 3 days to consider whether or not they wish to take the loan offer. This protects a borrower by giving them additional time to consider the impact of a loan on their finances and whether or not they can afford the loan and agree to its terms. Refinancing a primary residence is the only way to take advantage of the right of rescission.

Investment Property

A right to rescission is not permitted on loans made to borrowers in connection with the purchase or refinance of an investment property. Most states provide an exception to lenders under the Truth in Lending laws to remove rescission periods for these types of loans.

Vacation Homes

Vacation homes are also not applicable properties to the right of rescission. No matter what type of loan that you maintain on this type of property once you sign the documents they are final.

 


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