If you are you planning on refinancing your home loan with a Kansas City mortgage company, you should know and understand your right of rescission. What is the right of rescission and what does it mean for you as a borrower?
What is the Right of Rescission?
The right of rescission is a law that lets you cancel a mortgage refinance or home equity loan in a specific amount of time before closing on your home loan. In certain circumstances, borrowers are able to cancel their loan within three days for any reason with no questions asked.
The law was designed to make sure lenders provide borrowers with accurate disclosures. It also safeguards borrowers from loans that were described differently from what they actually are. The right to rescission is intended to protect consumers from putting their home at risk by using it to obtain another loan.
When Can You Use Your Right of Rescission?
Depending on the type of loans your Kansas City mortgage company offers, you may or not be able to exercise your right of rescission. You may use your right of rescission for:
You are able to apply the right of rescission to cash-out refinances regardless of whether your new loan is going through the same Kansas City mortgage company as your original mortgage. However, only the new money or loan will be covered by the right.
For those wanting to simply refinance to lower their rate or term, rescission can be used provided that the new mortgage is not through the game lender that financed the original loan.
You cannot use the right of rescission for:
- Loans made to purchase a home
- Business loans
- Loans for properties that are not the primary residence of the borrower