Right of Rescission a Little Known Treasure

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

As homeowners, many of you may not be aware of all the financial tools you have at your discretion. In fact, I learned something new myself today after reading an article in the Washington Post about homeowners’ “right to rescission”. This provision actually allows you as a homeowner to back out of a refinance deal within three days of closing. Let me repeat that- if you think you were pressured into terms that aren’t so good, or you find better terms elsewhere, you have three days after the closing to back out of the loan with absolutely no penalty.

Believe it or not, this is not a post mortgage meltdown law and it is by no means new. The homeowners’ “right to rescission” is actually a provision of the 1968 Truth in Lending Act. Although it can be an extremely useful tool for consumer protection, many people are not aware it exists.

It is important to point out that in order to qualify for the “right of rescission”, the property you are claiming it on must be your primary residence. Furthermore, it does not cover first purchase mortgages because it is not possible to rescind the “purchase” itself, which is different from the financing of the purchase.

This little known tool could save you thousands of dollars- so if you’re thinking of refinancing, keep it in mind.