A refinance closes Wednesday 15 July. Rescission runs Thursday, Friday and Saturday, and disbursement follows on Monday 20 July.
Correct Answer
C) Interest on the old loan runs to 20 July, so the payoff covers 5 extra days
The old loan accrues interest until it is actually paid off, which is the disbursement date after the rescission period, so the payoff has to be good through 20 July. Other choices: signing does not retire a loan; the new loan does not begin accruing until it funds; and the end of the rescission period is not the day money moves. Source: Rescission, disbursement and payoff timing
Why This Is the Correct Answer
The old loan accrues interest until it is actually paid off, which is the disbursement date after the rescission period, so the payoff has to be good through 20 July. Other choices: signing does not retire a loan; the new loan does not begin accruing until it funds; and the end of the rescission period is not the day money moves. Source: Rescission, disbursement and payoff timing
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