As part of the federal Truth-in-Lending Act, refinancing homeowners are granted a 3-day “cooling off” period post-closing during which they retain the right to rescind, or “cancel”, their recent refinance without penalty or cost.
The Right To Cancel is protection against surprises at closing and/or a change of heart. It’s also a safety valve for homeowners signing paperwork under duress. With 3 days to revisit and rethink the terms of a loan, a homeowner can maintain tighter control of his/her financial situation.
If you ever have the wish (or need) to execute your right to rescind, be aware that the process is a formal one. The required steps must be completed on-time, and in order, or else your request will be invalid.
The process starts with a document labeled “Right To Cancel”. It’s included in your closing package and lists the terms of a rescission in straight-forward language. Among the key points :
- You have 3 business days during which to cancel your loan
- When you cancel the refinance, the entire transaction is cancelled
- You must submit your Right To Cancel in writing
“Business day” is defined by the government to be every day, save for Sundays and federal holidays. A loan that closes on a Monday, therefore, must be rescinded prior to Friday at 12:00 AM.
Typically, rescission requests are faxed to the settlement agent, notary, or title company assigned with the refinance. It’s good practice to ask for an acknowledgement of receipt as proof of delivery, too.
There are some refinances for which the Right to Cancel does not apply, however. This includes refinances linked to an investment property, and loans not collateralized by residential real estate. There are other conditions, too, that may supersede your right to rescind so be sure to ask your lender.
When you preview homes as a home buyer, you can get a good feel for the home’s visible traits — its finishes, its room counts, and its landscaping, for example. What you can’t get a feel for, though, is the home’s “bones”.
It’s for this reason that real estate professionals recommend that you have a property formally inspected immediately after going into contract for it.
A home inspection is a thorough, top-to-bottom check-up of a property’s structure and systems. It is not the same as a home appraisal, which is a valuation of the property. By contrast, home inspections are an objective report on a home’s physical condition.
Home inspections are performed by home inspectors who will typically do the following :
- Check heating and cooling systems for leaks and efficiency
- Check electrical systems for safety and soundness of design
- Check plumbing systems for venting, distribution, and drainage
In addition, a home inspector will review a home’s roofing system; its doors, windows and garages; plus, any attic spaces and basements, where appropriate.
A home inspection may also uncover out-of-code electrical work that municipalities required to be fixed by law.
Meanwhile, it’s not just home buyers who can order inspections. Sellers can order them, too.
One recommended tactic is for a home seller to have the home inspected prior to listing for sale so that all required repairs can be made in advance of showing the home. This can speed up and simplify the sales process, and may help your home sell at a higher price. Buyers often prefer homes in “move-in” ready condition.
A thorough home inspection can take up to 6 hours to complete, depending on the size of the home.