National Real Estate Exam (PSI)FinancingMedium
Under the Truth in Lending Act, a borrower refinancing the mortgage on their primary residence with a new lender generally has how many business days to rescind the transaction?
- A10 business days
- B3 business days
- C1 business day
- D7 business days
Show answer & explanationAnswer & explanation
Correct answer: B. 3 business days
TILA provides a 3-business-day right of rescission for certain refinance transactions on an owner-occupied primary residence, allowing the borrower to cancel without penalty.
Why the other options are wrong
- A. Too long; not the standard rescission period under TILA.
- C. Too short; TILA requires more time than one day.
- D. Too long; not the standard rescission period.
Right of Rescission (TILA)
A borrower's right under the Truth in Lending Act to cancel certain refinance or home equity loans within 3 business days without penalty.
- Applies to refinances and home equity loans on primary residence
- Does not apply to purchase-money mortgages
- Lender must provide notice of the right to rescind
Memory trick: Three days to change your mind after refinancing your home.