The full explanation
When you refinance you usually pay closing costs again. If your payment goes down, the CFPB says to understand how much of the drop comes from a lower rate and how much from a longer loan term. In many refinances you have a right to cancel (right of rescission) until midnight of the third business day, but not if you refinance with the same lender without borrowing more.
An example
Rubén wants to refinance to lower his payment. He compares the new payment and term with his current loan, and adds up the closing costs to see how long it would take to earn them back.
You will see it in…
- Refinance offers you get in the mail
- The new loan's Loan Estimate
- The Notice of the Right to Rescind
