The question…

“Does the right to cancel apply when you refinance your loan with your existing lender? We are doing a no cash-out refinance (aka rate and term refinance) with our existing lender to a lower interest rate. We are not borrowing any additional funds and are paying for all closing costs by certified check at closing.

Our existing lender has told us that we will have the right to cancel within 3 days of closing which essentially for us puts our loan in limbo for 3 days. We have no intention of canceling - we are simply refinancing to take advantage of a lower interest rate. But from what we are being told by the lender, we cannot waive this right to cancel.

Does the right to cancel apply to all refinances? I have seen information that indicates that it does not apply when you refinance your mortgage with your existing lender.”

My answer:

Yes, the right of rescission or right to cancel applies to every owner occupied refinance (investor refinances are not covered). It doesn’t matter if you are using your existing lender or not.

And yes, your mortgage is in limbo until the 3 days are up. But technically it is not even a mortgage yet. It won’t be until it funds on the 4th day. Your check for the closing costs is being held at the title company but nothing is being done with that either. You could have even waited and brought it to the title company on the day of funding.

The right of rescission is there for your protection. It gives you a chance to make sure this is really what you want to do. And even though you are sure about this refinance…you still have to wait the 3 days.

Thanks for the question…

Good Luck!

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