Under the federal Truth in Lending Act (TILA), the 3-business-day right of rescission applies to which type of transaction?
Correct Answer
B) Refinances and home equity lines of credit (HELOCs) secured by the borrower's primary residence
Under TILA (Regulation Z), borrowers have a 3-business-day right to rescind certain credit transactions secured by their primary residence. This right applies to refinances and home equity loans or HELOCs, giving borrowers time to reconsider using their home as collateral. The right of rescission does NOT apply to purchase money mortgages (loans used to buy the home), loans on second homes or investment properties, or commercial transactions. Mississippi borrowers exercising this right must notify the lender in writing within the 3-business-day window.
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Related Topics & Key Terms
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Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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