Your Right to Cancel
With most Home Equity Conversion Mortgages or reverse Mortgages, you have at least three business days after closing to cancel the loan for any reason, without penalty. This is known as your right of “rescission.” This right of rescission period is the time between signing of closing documents and the actual funding of the loan. You must notify the lender in writing of your intent to cancel. Send your letter by certified mail, and ask for a return receipt. After you cancel, the lender has 20 days to return any money you’ve paid for the financing.
Purchase Money Home Equity Conversion Mortgage’s or Reverse Mortgages are NOT eligible for the 3 day right of rescission period. Meaning once you sign closing docs and the loan is funded on the same day, you cannot cancel a Purchase loan.
It is important to know terms, which include, amount financed, interest rate, amount available at closing, amount available after 1st year and costs associated with a Reverse Mortgage prior to closing or funding of these loans. Education and information as to the full guidelines and costs are always highly recommended, not only with Reverse Mortgages, but with any Mortgage.
Knowing all of your options prior to closing will ensure a smooth and worry free transaction. Amongst industry leaders, getting everything in writing prior to closing is highly recommended. Knowing exactly what you are signing for prior to closing is also highly recommended. In most cases, the appraisal fee and counseling fee are non-refundable