Refinance guide TRID timelines and right of rescission on refinance
TRID timelines and the right of rescission on refinance
When refinancing your mortgage, two pieces of consumer protection law shape the timing and final steps: the TILA-RESPA Integrated Disclosure rule (TRID) and the Truth in Lending Act’s right of rescission. Understanding how they work together will help you avoid delays, unexpected surprises at closing, and the risk of a loan being re-disclosed (and re-waited) at the last minute.
What TRID and the right of rescission are — and when they matter
TRID (the integrated disclosure rule created by combining parts of the Truth in Lending Act and RESPA) governs the timing and delivery of the Loan Estimate (LE) and Closing Disclosure (CD) for most closed-end consumer mortgage loans, including most refinances of primary residences. The rules require specific disclosures and minimum waiting periods before certain actions can occur.
The right of rescission is a separate protection under TILA that gives borrowers on most refinances of their primary residence a limited period to cancel the credit transaction after closing. It does not apply to purchase loans, business-purpose loans, or loans not secured by the borrower’s principal dwelling.
When it makes sense to pay attention
- If you’re refinancing your primary residence (rate-and-term or cash-out), TRID and the rescission rules apply and will affect the timing of funding and recording.
- If you’re refinancing an investment property, a second home, or taking a business loan, rescission may not apply though TRID disclosure rules often still do.
- If you need a quick close — for example, to capture a temporary rate — you must plan timelines carefully because TRID and rescission require minimum waits.
Benefits and drawbacks
Benefits
- Consumer protection: TRID standardizes disclosures so you can compare costs and understand the APR, fees, and cash-to-close.
- Time to review: The mandatory waiting periods give you time to review the CD and decide whether to proceed or rescind if necessary.
- Right to cancel: The rescission window lets you back out of a refinance without penalty within the allowed period.
Drawbacks
- Added timing: Mandatory waiting periods (LE and CD) can slow closing and funding.
- Risk of re-disclosure: Changes to loan terms or certain fees after the CD is issued can trigger a new three-business-day waiting period.
- Funding delay: For refinances of a principal residence, lenders typically cannot fund until the rescission period expires, which adds days between signing and disbursement.
Costs and fees to expect related to refinancing
Refinance fees that must be disclosed under TRID and can affect timing include:
- Loan origination and underwriting fees
- Appraisal and property inspection costs
- Title search, title insurance, and closing protection letters
- Recording and county fees
- Credit report, flood certification, and other third-party charges
- Prepayment penalty (if your current loan has one)
TRID groups these costs on the LE and CD and applies “tolerance” rules that limit how much certain fees can increase between the LE and CD without re-disclosure or issuer liability.
Step-by-step TRID + rescission process for a refinance
- Apply: Submit an application and required information. The lender has three business days to issue a Loan Estimate. (Business-day definition for the LE is days the lender is open for substantially all business hours.)
- Review LE: Compare the LE to other offers and verify fees, rate, and estimated cash-to-close.
- Underwriting and conditions: Lender processes, orders appraisal/title, and issues loan approval with conditions.
- Closing Disclosure: The lender must provide a final CD at least three business days before consummation (closing). For the CD waiting period, business days are calendar days excluding Sundays and federal holidays.
- Consummation (closing): You sign loan documents. For most refinances of a primary dwelling, you also receive the Notice of Right to Cancel at closing (or shortly before); the rescission period begins when you receive that notice and all material disclosures.
- Rescission period: You have until midnight of the third business day after you receive the notice and disclosures to rescind. If the lender fails to provide required notices, the rescission period can extend up to three years.
- Funding and recording: Lenders generally will not fund and record the new mortgage until the rescission period expires. If you do not rescind, the lender disburses funds and records the deed of trust or mortgage.
Common pitfalls to avoid
- Miscounting business days: LE and CD use different business-day definitions. Confirm calendar counting with your lender.
- Late changes after the CD: Adding or changing fees, product features, or APR late in the process can trigger re-disclosure and a new three-business-day wait.
- Assuming immediate funding: For refinances with rescission rights, funding typically occurs after the three-business-day rescission window, not immediately after signing.
- Ignoring the rescission notice: If you receive confusing or incomplete rescission information, ask for clarification in writing before closing.
- Switching lenders mid-process: Changing lenders after disclosures can restart the timeline and cause duplicate fees and delays.
FAQ
Q: How long is the rescission period on a refinance?
A: For most refinances of a primary residence you have until midnight of the third business day after you receive the Notice of Right to Cancel and all required disclosures. If the lender fails to provide the notice or disclosures properly, the rescission period can extend up to three years.
Q: Can a lender fund a refinance before the rescission period ends?
A: Generally no. For most owner-occupied refinances the lender must wait until the rescission period expires before funding and recording the mortgage. Funding earlier can violate TILA and expose the lender to penalties.
Q: What happens if the Closing Disclosure is delivered late?
A: If the CD is not provided at least three business days before consummation, the lender may be required to reissue the CD and restart the three-business-day waiting period. This will delay closing and funding.
Q: Can I waive the right of rescission to accelerate funding?
A: Borrowers generally cannot waive the statutory right of rescission. The protection is required by law for eligible transactions and cannot be signed away to speed funding.
Understanding TRID timelines and the right of rescission helps you plan realistic closing dates, avoid last-minute re-disclosures, and ensure you have time to review documents. Ask your lender to walk through the calendar for each disclosure and confirm when funding and recording will happen so you can schedule moves, payoffs, and escrow adjustments confidently.
META: TRID timelines and right of rescission on refinance — evergreen guide, last updated 2025-08-25
