What Is the HELOC Cooling Off Period and How Does It Work?

The HELOC cooling off period is a three-day window after closing when you can cancel your home equity line of credit for any reason, without penalty.

This federal protection, officially called the right of rescission, exists because your home serves as collateral for the loan.

Below, we’ll cover exactly how to calculate your cancellation deadline, the steps to cancel properly, and what happens to your fees and credit score if you decide to back out.

In this article (Skip to...)

• The HELOC cooling off period
• The HELOC 3-day rescission period
• When the HELOC rescission period starts
• Cancelling your HELOC during the cooling off period
• What happens after you cancel your HELOC
• Exceptions to the HELOC right of rescission
• Does canceling a HELOC affect your credit score?
• What if your lender did not provide rescission disclosures
• Should you cancel your HELOC or keep it
• FAQs about HELOC cooling off periods

What is the HELOC cooling off period

A HELOC cooling off period gives you three business days to cancel your home equity line of credit after closing, without penalty.

The official term for this protection is the “right of rescission,” and it comes from the Truth in Lending Act (TILA), enforced by the Consumer Financial Protection Bureau (CFPB).

Why does this protection exist? Because your home is on the line. A HELOC uses your primary residence as collateral, and federal regulators wanted borrowers to have one last chance to reconsider before that commitment becomes final.

• Right of rescission: Your legal ability to cancel certain home-secured loans after you’ve signed the closing documents.
• Which loans qualify: HELOCs, home equity loans, and mortgage refinances on your primary residence all include this protection.
• What doesn't qualify: Purchase mortgages, vacation homes, and investment properties are excluded.

One important detail: the cooling off period only applies to your primary residence. If you’re taking out a HELOC on a rental property or second home, you won’t have the option to cancel after closing.

How long is the 3-day rescission period for a HELOC

The rescission period lasts exactly three business days. This timeline is set by federal law and applies to all HELOCs secured by a primary residence, regardless of which lender you use.

What counts as a “business day” is specific under this rule. Saturdays are included, but Sundays and federal public holidays are not. This distinction matters when you’re calculating your deadline.

How to calculate business days for your rescission deadline

Start counting the day after your closing. If you close on a Wednesday, your three business days are Thursday (day 1), Friday (day 2), and Saturday (day 3). You would have until midnight on Saturday to cancel.

If a federal holiday falls within that window, it doesn’t count as a business day. So if you close on a Wednesday before Thanksgiving, Thursday (the holiday) wouldn’t count, and your deadline would extend to the following Monday.

Tip: Mark your cancellation deadline on your calendar immediately after closing. The three-day window passes quickly.

When does the HELOC rescission period start

The three-day clock doesn’t automatically start when you sign your loan documents. Instead, it begins on the day after the latest of three specific events.

All three events typically happen at closing, so your rescission period usually starts the day after you sign. However, if your lender fails to provide any of the required documents, the clock doesn’t start.

If you never received proper disclosures, your right to cancel can extend from three days to up to three years. This extended timeline is a significant consumer protection, though it’s rarely invoked since most lenders follow disclosure requirements carefully.

How to cancel your HELOC during the cooling off period

Canceling your HELOC during the rescission period is your legal right, and the process is straightforward. The key is acting quickly and documenting everything.

Step 1. Review your right to rescind notice

At closing, your lender is required to give you two copies of a document called the “Notice of Right to Rescind.” This notice states your exact cancellation deadline and provides specific instructions on where to send your cancellation request.

Look for the lender’s mailing address, fax number, or email address designated for cancellation notices. Using the correct contact information helps ensure your cancellation is processed without delays.

Step 2. Send written cancellation before the deadline

Your cancellation request has to be in writing. A phone call won’t work. You can typically send it via mail, fax, or email, depending on what your lender accepts.

Here’s an important detail: the cancellation is legally effective the moment you send it, not when the lender receives it. So if you mail your cancellation letter on the third business day and it’s postmarked before midnight, you’ve met the deadline even if the lender doesn’t receive it for several more days.

Step 3. Keep proof of your cancellation request

Documentation is essential. If you mail your cancellation, use certified mail with a return receipt requested. If you send it via email or fax, save a copy of the confirmation showing the date and time.

This proof protects you if any disputes arise later. Without it, you might find yourself in a difficult situation with your lender.

Step 4. Confirm the lender released the lien

After sending your cancellation, follow up with the lender to confirm they received it and are taking steps to void the loan. Ask specifically about the timeline for releasing the lien on your property and returning any fees you’ve paid.

What happens after you cancel your HELOC

Once you submit a valid cancellation notice within the three-day window, your lender has specific legal obligations. The loan is essentially voided as if it never existed.

Fees and payments the lender must return

The lender is required to refund all money you paid in connection with the loan:

• Application fees you paid when applying
• Appraisal costs for the home valuation
• Any finance charges already assessed
• Third-party fees the lender collected, such as title search costs

You’re entitled to a full refund of all amounts paid, not a partial credit toward a future loan.

How long the lender has to release the lien

Federal law gives the lender 20 calendar days from receiving your cancellation notice to void the security interest in your home and return your fees. During this period, you’re not obligated to make any payments on the loan.

If the lender fails to meet the 20-day deadline, you may have additional legal remedies available. However, most lenders comply promptly to avoid regulatory issues.

Purchase mortgages

Mortgages used to buy a home do not include a rescission period. The three-day rule applies only to refinances and home equity products on a property you already own.

This distinction makes sense when you think about it: in a purchase transaction, the seller is counting on the deal closing on schedule. A three-day cancellation window would create significant uncertainty in real estate transactions.

Investment properties and rental homes

Properties that aren’t your primary residence are excluded from rescission rights. This includes vacation homes, rental properties, and any real estate you own but don’t live in as your main home.

Emergency situations that allow waiver

In rare cases involving a genuine personal financial emergency, you can voluntarily waive your right of rescission. For example, if you need funds immediately to prevent foreclosure or make emergency repairs to prevent imminent damage to your home, you might choose to waive the waiting period.

To do this, you’d provide the lender with a dated written statement describing the emergency and explicitly waiving your right. Both you and any co-owner of the property would sign. This option exists but is rarely used, and lenders can’t pressure you into waiving your rights.

Does canceling a HELOC affect your credit score

Exercising your right of rescission does not negatively impact your credit score. When you cancel within the three-day window, the loan is voided as if it never existed, so there’s no account closure or early payoff to report.

The initial hard credit inquiry from your HELOC application will still appear on your credit report. However, a single inquiry typically has a minimal and temporary effect, usually just a few points, and it stops affecting your score after about 12 months.

What if your lender did not provide rescission disclosures

If your lender failed to provide the proper TILA disclosures or the two required copies of the notice of right to rescind, your rescission period extends significantly. Instead of three days, you may have up to three years from the date of closing to cancel.

This extended timeline is a powerful consumer protection. It means that even months after closing, you might still have the right to cancel if you can demonstrate that required disclosures were missing or materially incorrect.

If you believe your disclosures were incomplete, consider contacting the Consumer Financial Protection Bureau (CFPB) or consulting with a consumer protection attorney. They can help you understand your options and whether the extended rescission period applies to your situation.

Should you cancel your HELOC or keep it

The cooling off period gives you time to make a final decision. Here are some factors to weigh:

If you’re unsure, use the three days to compare your HELOC offer against alternatives. Getting quotes from multiple lenders can help you determine whether you’re getting a competitive deal.

FAQs about HELOC cooling off periods