When does a borrower have the right to cancel a loan during a refinance?

A borrower has the right to cancel a loan during a refinance within three business days of signing the loan documents due to the provisions of the Truth in Lending Act (TILA). This allows consumers to have a brief window to reconsider their decision about the loan and to ensure they fully understand the terms of the agreement they've entered into.

The three-day cancellation period is designed to protect borrowers by giving them an opportunity to review the terms, explore potential alternatives, or simply change their minds without facing any penalties or financial repercussions. This is particularly important in refinancing, as such transactions can sometimes involve significant financial commitments and implications.

Options like 24 hours or any time prior to closing do not align with the regulatory framework designed to offer borrowers this specific right. Furthermore, allowing cancellation after the loan has been funded would undermine the purpose of providing an opportunity to withdraw from the agreement if the borrower has concerns or second thoughts.