I recently completed a loan application and uploaded necessary documents such as W2s and paystubs. The loan advisor is moving forward with the process. However, after reflecting since Tuesday, I’m considering not going ahead due to discomfort with the new loan amount. Can I still change my mind at this stage, even though the closing is scheduled for next month? I’ve heard about a Right to Rescission; does this apply only after closing?
Filing an application doesn’t lock you in. You can withdraw at any time before closing. The Right of Rescission specifically applies to refinances on owner-occupied homes, allowing you three days post-closing to rescind. Remember, escrow amounts are still your money and will be refunded from your old loan once it’s paid off.
@Greer
It’s important to note that loan amounts might not always include escrows, depending on how your loan is structured.
Blaine said:
@Greer
It’s important to note that loan amounts might not always include escrows, depending on how your loan is structured.
True, but if escrows aren’t included in the loan amount, the borrower will need to cover these costs out of pocket or adjust the loan amount accordingly.
@Greer
Alternatively, borrowers can opt to waive escrows or bring cash to close, which provides some flexibility.
If you’re not feeling comfortable with the loan or see no significant benefits, it’s better not to proceed.
Simply inform your Loan Officer (LO) that you’ve decided not to proceed. They can handle the withdrawal and make any necessary adjustments to your application.
Consider discussing your concerns with your loan officer. They can provide clarity on why your loan amount has increased and help you understand all your options. Sometimes, the increase can be due to initial closing costs or escrow payments, which might be refundable or adjustable.
@Sonny
This advice is crucial. Understanding the breakdown of your loan amount can reveal opportunities to adjust or reduce it effectively.
It’s essential to communicate openly with your loan officer. If after the discussion you still wish to withdraw, you are entirely within your rights to do so.
You’re not bound to proceed with the mortgage until you sign the closing documents. Furthermore, for refinance transactions on primary residences, you even have a three-day window after signing to rescind the decision. Make sure you’re making the best choice for your financial situation without external pressure.
Yes, you can definitely cancel now. For refinances on primary residences, the right of rescission allows you to back out within three days after closing, but you can withdraw your application at any stage before then.
@Holland
To clarify, you can cancel your application at any point before signing the closing documents. The three-day rescission period is an additional protection specifically for refinancing.