When it comes time to close on a refinanced mortgage, there are a few different rules. For one thing, there is a mandatory rescission clause that lets you get out of your loan if it is for your main home. You can also choose to close your account at any time, which is helpful if you think interest rates will go down soon.
Rescission Clause
With a rescission clause, if the property is your main home, you have three days after closing to cancel your loan. Think of it as a time to "calm down." If you change your mind, you can get out of the loan and get back almost all of the fees.
Most of the time, this clause helps when a homeowner wants to use the equity in their home but then changes their mind. Sometimes, the refinanced mortgage isn't needed because the job situation or plans for the house have changed.
Once you have cancelled your mortgage, the lender's background check will only have a short-term effect on your credit score. If you decide to apply for another loan soon, it won't make much of a difference.
Delaying Closing
You don't have to close on your mortgage refinancing within 30 days. You can keep it open for as long as you want. But you have to think carefully about what you want. While you wait for rates to go down, they could go up while you pay your high mortgage rate.
Mortgage rates change almost every hour, but they tend to move in a certain direction. The general mortgage rate can be found in the business section of your newspaper or on the evening news. When the Federal Reserve Board raises or lowers interest rates, it will affect mortgage rates in the long run. But mortgage rates are also affected by other things, which makes it hard to know exactly how they will change.
You should also remember that every month you wait to lock in rates is a chance to save money that you lose. A 1 percent discount can save you a lot of money, but a 1/4 or 1/8 of a percent isn't really worth it. Waiting for rates to go down is a risk you have the right to take.
Know what you can do.
Once you start the process of refinancing, you don't have to go through with the loan or closing. Even after the loan has been closed for three days, you can still stop the process. You can also choose when to lock in the rates. With these choices, you can find out about all of your financial options and make the best choice for you.
