When do refinance loans fund?

When do refinance loans fund?

• A. 3 days after closing for rescission purposes
• B. On the closing date
• C. Immediately after approval
• D. During underwriting

Answer: (A)

Refinance timing is governed by the Truth in Lending Act’s right of rescission. For a loan that refinances a borrower’s principal dwelling, the borrower has a three-business-day window after closing to cancel the agreement. Because the borrower could exercise that right, lenders typically do not fund the new loan until those three days have passed, so funds aren’t disbursed during the rescission period. In practice, funding occurs after the rescission window ends, not on the closing date, and certainly not during underwriting or simply after initial approval. This timing specifically applies to refinances of a primary residence; other types of loans (like investment-property refinances) may follow different rules.

Refinance timing is governed by the Truth in Lending Act’s right of rescission. For a loan that refinances a borrower’s principal dwelling, the borrower has a three-business-day window after closing to cancel the agreement. Because the borrower could exercise that right, lenders typically do not fund the new loan until those three days have passed, so funds aren’t disbursed during the rescission period. In practice, funding occurs after the rescission window ends, not on the closing date, and certainly not during underwriting or simply after initial approval. This timing specifically applies to refinances of a primary residence; other types of loans (like investment-property refinances) may follow different rules.