How to Get Out of a Bad Deal

The key to exercising this right, though, is to do it within the legally prescribed time — and that's a tight window. You have three days after you sign a mortgage contract to exercise your right of rescission, according to Ira Rheingold, executive director of the National Association of Consumer Advocates.

Your rescission period starts at midnight on the day after you sign loan documents. The period ends three business days later, including Saturdays but not Sundays or holidays. Once midnight strikes on the third business day, the rescission period is over, and any loan documents you've signed become legally enforceable. For example, if you sign a loan at 3 p.m. on Tuesday, then the rescission period begins nine hours later, at midnight. It runs for Wednesday, Thursday and Friday. The loan would take effect on Saturday.

But if your bank never notified you of your rescission rights, or you can show that there was a material misstatement in your loan documents, then your rescission rights are extended to three years.

To issue a rescission notice to the lender, you have to do it in writing. A phone call or in-person visit isn't enough.

Also, rescission rights are granted only for your primary house; you don't have them for a second home or an investment property. Last, your rescission rights apply only with a lender other than your current lender.

Why would you want to rescind a loan agreement? Maybe you've decided you can't afford the payments or could get a better deal. Or perhaps you decided it's just not a good idea to tap the equity in your home after all.

Whatever the reason, if you legally rescind a mortgage deal, you should not suffer any financial penalties.

Your time-share

Time-share properties also include a right of rescission — and for good reason. In many cases people buy time-shares after high-pressure sales presentations. Even if you bought because you were basking in the glow of a vacation, you still have the right to change your mind. That's why a rescission period is often called a "cooling off" period.

State law varies, with rescission periods ranging from three to 21 days. This gives you time to have an attorney, trusted family member or friend check over your time-share purchase so you can be comfortable that you got a good deal and that the contract is as promised.

Your retail purchases

Even with smaller retail purchases, such as clothing or jewelry, you can often get a refund, credit or exchange after a change of heart. Just make sure you know the store's refund policy before you buy. And always keep your receipts.

Ultimately, your best protection against buyer's remorse is to buy only what you really want, when you're truly ready — and to know the terms of the deal before signing on the dotted line. If you feel as if you need a voice of reason when you're at the mall, bring a shopping buddy with you to keep you on budget.

Lynnette Khalfani-Cox, The Money Coach(R), is a personal finance expert, television and radio personality, and regular contributor to AARP. You can follow her on Twitter and on Facebook.

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