Borrowers who refinance loans on their primary residences with lenders other than their current lender have a "right of rescission." They can cancel the deal at no cost to themselves within three days of closing. Following a rescission, the closed loan ceases to exist.
What Is the Purpose? The right of rescission is designed to protect borrowers who have been deceptively sweet-talked into a transaction that is not in their financial interest. It gives them an opportunity to think it over, solicit advice from others, and back out, while recovering any monies they have paid out.