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Real Estate Definitions: The Right To Cancel

Real Estate Definitions: The Right To CancelYour Right To Cancel A Loan

Here is one of a few real estate terms you should know if you are receiving a loan.

The Federal Truth-in-Lending Act allows three days for homeowners who are refinancing, to reconsider a loan during which they can cancel their refinance without penalty.

The Right to Cancel protects homeowners against surprises at closing or a change of heart. It is also a safety net for homeowners who are signing paperwork under stress. Given three days to reexamine the loan, homeowners can retain more control over their financial situation.

The process for executing your right to cancel is straightforward and formal. All steps must be completed on time and in order, otherwise the request will be invalid.

The first document to start the process is labeled “Right to Cancel.” This document can be found in your closing package and lays out the steps in simple terms.

Document Overview

    1. You have 3 business days to cancel your loan if you wish.
    2. The whole transaction is canceled when you cancel the refinance.
    3. The document must be submitted in writing.

The government defines a “business day” as every day except for Sundays and federal holidays. For example, if a loan is closed on a Monday, this loan then must be canceled by Thursday at 11:59 PM.

Generally, the request to rescind is sent to the settlement agent, notary, or title company responsible for the loan. A word of advice is to ask for an acceptance receipt as proof of delivery.

However, there are some loans where this act does not apply. These include refinances connected to an investment property and loans not collateralized by residential real estate. Be sure to ask your lender to explain further other conditions that may overrule your right to rescind. JVM’s Client Advisors are happy to answer any additional questions you may have about your right to cancel. We can be reached 7 days a week here, by phone at (855) 855-4491, or by email at jvmteam@jvmlending.com.


Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167