Definition
A federal right to cancel certain loans secured by your main home, such as a refinance with a new lender or a HELOC, within three business days.
What it means
Under the Truth in Lending Act and Regulation Z, when you take out certain credit secured by your principal dwelling, you can cancel within three business days after signing, receiving the required disclosures and receiving two copies of the rescission notice, whichever comes last. It applies to many refinances with a new lender, home equity loans and HELOCs. It does not apply to a mortgage used to buy or build the home, or to a refinance with the same lender that adds no new money. Business days for this rule include Saturdays but not Sundays or federal holidays. If you cancel in writing, the lender must return fees and release its security interest within 20 days. If required disclosures were missing, the right can last up to three years.
Example
Signing HELOC papers on a Monday that is not a holiday generally gives you until midnight Thursday to cancel, counting Tuesday, Wednesday and Thursday as the three business days.
Illustrative numbers only. Your situation will differ.