Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

When a borrower signs a refinance mortgage loan, they typically have a right to rescind the loan agreement within a specific timeframe. This right is outlined in the Truth in Lending Act (TILA) and is known as the "right of rescission." The correct duration for rescinding a refinance mortgage loan is three business days.

This timeframe allows borrowers to reconsider their decision after signing the loan documents, ensuring they have the opportunity to cancel the transaction if they feel it's not in their best interest or if they have changed their mind for any reason. It applies specifically to refinances of a primary residence where the borrower is taking out a new loan to replace an existing one. The provision is designed to protect consumers and provide them with a safeguard against hasty financial decisions.

The other options do not align with the established rules regarding the right of rescission. For instance, 30 days, 60 days, and no right of rescission would not reflect the protections provided to consumers under TILA for refinance transactions.