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Maybe you found better credit terms or you got
cold feet. A provision of the Truth in Lending Act gives you the
right to cancel certain real estate loans within three business
days without penalty. It is called the right of rescission.
You can rescind the transaction for any reason. In
the case of home equity loans, you can rescind only if you are using
your principal residence -- not a vacation or second home -- as
collateral.
During those three days, the creditor should not take
any action on the loan, such as giving you money. If you are dealing
with a home improvement loan, the contractor should not deliver
any materials or start work.
If you do exercise your right of rescission, you must
do so in writing. Make sure your notice is delivered before midnight
of the third business day. The loan papers will describe how to
exercise your right and where to mail the notice that you have rescinded
the loan.
For rescission purposes, business days include Saturdays
but not Sundays or legal public holidays.
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Chapter 4: Watch out!
