How many business days does a buyer have to rescind a loan, excluding a first mortgage?

The correct answer indicates that a buyer has three business days to rescind a loan, excluding a first mortgage. This three-day rescission period is in accordance with the regulations established under the Truth in Lending Act (TILA). TILA mandates that consumers have a specified period to reconsider their loan agreements, particularly for loans secured by their principal dwelling.

The three-day window provides consumers the opportunity to review the terms of the loan and ensure they are fully informed before committing. This period begins after the borrower receives the loan disclosures, allowing them the necessary time to evaluate their decision without the immediate pressure of a binding contract.

This rule specifically applies to many types of loans, including second mortgages and equity lines of credit, where the borrower has the right to cancel the transaction within three business days. Understanding this timeframe is critical for both buyers and real estate professionals, as it ensures buyers can make informed decisions regarding their financing options.