A rescission period gives you the right to back out of a refinance loan before closing with no penalty. Think of it as your Right to Get Cold Feet. Federal law requires a 3-day rescission period whenever you refinance a primary residence.

To satisfy the law, three “business” days must pass between the day you sign papers and the day your loan closes. The definition of a business day is a bit odd—it is any day mail is delivered. So, if you sign papers on a Monday, the soonest your loan can close is Friday (assuming Tuesday, Wednesday and Thursday are not national holidays). If you sign on the Friday before, say, Veterans’ Day, your loan can’t legally close until the next Thursday. Your rescission days would be Saturday, Tuesday and Wednesday.

When you sign your closing papers, your escrow officer will notify you of your right to rescind and provide a form you’d use to do so. Sign and return this form before midnight of the third day and your loan won’t close. When working on a refinance, we’ll keep these dates in mind and make sure you sign in time to close before your interest rate lock expires.