Refinance guide TRID timelines and right of rescission on refinance

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TRID Timelines and the Right of Rescission on Refinance: What Homeowners Need to Know

If you’re refinancing your primary residence, two federal rules you’ll encounter are TRID (the TILA-RESPA Integrated Disclosure rule) and the Truth in Lending Act’s right of rescission. Both affect the timing of paperwork, closing, and when money and the new mortgage can become official. This guide explains what each rule is, when they apply, the benefits and drawbacks, typical costs, step-by-step timing, common pitfalls, and short FAQs.

What TRID and the Right of Rescission Are — and When They Apply

TRID combines disclosure requirements from TILA and RESPA for most closed-end consumer mortgage transactions. Under TRID, lenders must provide a Loan Estimate (LE) soon after application and a Closing Disclosure (CD) before consummation so borrowers can compare costs and avoid surprises. TRID generally applies to closed-end purchase loans and refinances, but not to open-end (HELOC) plans or reverse mortgages.

The right of rescission is a TILA protection that gives borrowers in most refinances of their principal dwelling a limited window to cancel the loan after closing. It does not apply to purchase-money mortgages (buying a home), and there are specific rules for timing and notice.

Benefits and Drawbacks

Benefits:

  • Greater consumer protection and transparency: TRID disclosures make fees and terms easier to compare and help reduce last-minute surprises.
  • Time to review: The required waiting periods give homeowners time to evaluate documents and seek counsel if something looks off.
  • Right to cancel: Rescission provides a short, clear legal remedy if you change your mind or discover disclosure errors.

Drawbacks:

  • Added timeline and possible delays: Re-disclosures, tolerance violations, or rescission requirements can delay funding or recording of the loan.
  • Complexity: Different rules apply to different loan types (closed-end vs open-end), and small errors by the lender can extend deadlines.
  • Potential administrative costs: Multiple disclosures and re-disclosures can increase lender costs, sometimes passed in part to the borrower.

Costs and Fees to Expect

TRID itself doesn’t add a specific fee, but refinancing has typical costs you should budget for:

  • Application fee (if charged), appraisal, and credit report
  • Title search and title insurance
  • Escrow/settlement agent fees, recording fees, and notary fees
  • Loan origination or underwriting fees and any broker fees
  • Prepaid items: interest, taxes, homeowner’s insurance escrows
  • Possible re-disclosure administrative costs if terms change

Also note: If the lender fails to provide proper rescission notices or accurate disclosures, the borrower’s rescission window may be extended substantially — which can affect when funds are disbursed and may create logistical costs for the lender and borrower.

Step-by-Step TRID and Rescission Process on a Refinance

1. Application

You submit a completed mortgage application. Under TRID, the lender must provide a Loan Estimate within three business days of receiving your application.

2. Loan Estimate (LE)

The LE shows estimated interest rate, monthly payments, and closing costs. Use it to compare offers. TRID requires the LE to be prompt and accurate within allowable tolerances.

3. Processing and Underwriting

Lender verifies income, orders appraisal, title work, and completes underwriting. If circumstances change materially (e.g., new fees, changed loan terms), a revised LE or CD may be required.

4. Closing Disclosure (CD)

The lender must provide the CD at least three business days before consummation (usually signing). This three-day waiting period gives time to review final costs. If the lender issues a revised CD because of certain changes, a new three-day waiting period may restart.

5. Consummation (Closing)

You sign loan documents. For most refinances of a principal residence, TILA’s rescission rules then apply: the borrower typically has three business days to cancel the loan.

6. Rescission Period and Funding

Creditors generally may not record the mortgage or disburse funds until the rescission period has expired. That means payoff of your existing mortgage and the recording of the new mortgage may be delayed until after those three business days pass. If the lender failed to provide proper rescission notice, the rescission period can extend to years.

Common Pitfalls to Avoid

  • Assuming TRID doesn’t apply: TRID covers most closed-end refinances. Ask your lender whether your specific product is TRID-covered.
  • Not accounting for waiting periods: Schedule closings with TRID and rescission timelines in mind — avoid late-week closings that reduce practical business days.
  • Missing re-disclosure triggers: Small changes can require a new CD and restart the three-business-day wait. Confirm final figures well before your target closing date.
  • Expecting immediate payoff/recordation: Don’t assume your old mortgage is paid off at signing. Ask whether funds will be disbursed at closing or after the rescission period expires.
  • Overlooking rescission notice errors: If the lender omits or misstates required rescission notices, your rescission period can extend, complicating funding and recording.

Short FAQ

Does TRID apply to all refinances?

TRID applies to most closed-end refinance mortgages. Open-end credit (HELOCs) and reverse mortgages are generally excluded. Confirm with your lender.

How long is the right of rescission?

Typically three business days after consummation (signing) or after the creditor delivers the required rescission notice — whichever is later. If the lender fails to provide required notices, the rescission period can extend up to three years.

Can I waive my right to rescind?

No. The right of rescission is a statutory consumer protection and cannot be waived in most transactions covered by TILA.

What if the lender misses TRID deadlines?

If the lender fails to provide the LE or CD within required timeframes, you may have remedies under federal law and the lender may need to correct the disclosure and re-start waiting periods. Discuss options with your lender or an attorney.

Understanding TRID timelines and the right of rescission helps you plan closings, avoid surprises, and preserve your legal rights. Always review your Loan Estimate and Closing Disclosure carefully, ask questions about any changes, and confirm whether funding and recording will occur at signing or after the rescission period.

META: TRID timelines; Loan Estimate; Closing Disclosure; right of rescission; refinance; CFPB; TILA; refinancing timing; closing delays

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