In a refinance mortgage, your closing costs can be included in the loan amount and do not have to be paid separately as they usually do in a purchase mortgage transaction. This allows you to refinance your home for a lower interest rate or to consolidate other debt and not have to pay any money out of pocket.
In a refinance mortgage, there is a mandatory 3 day cooling off period called the rescission period. During this time, the borrower has the right to rescind or back out of the loan with no penalty. Although the borrower has signed all the paperwork and the loan is closed, the loan funds are not disbursed and interest does not start accruing until the rescission period is over. For example, if you sign all of your final loan paperwork on a Monday, your loan is not funded until Friday. The 3 day rescission period does not include the day you sign your paperwork.
It is very important to factor in this three day cooling off period when you do your refinance, especially if you are paying off other debt with the loan.
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