There are some dishonest lenders out there, willing to take advantage of your desire for cash and cheat you out of your equity. Here are common scams:
If you do notice and object, the lender may use scare tactics, telling you that if you don't want the insurance, the loan will have to be rewritten, resulting in a delay and even reconsideration of your application. If you agree to buy the insurance, you end up paying extra for a product you do not want or need.
Amid the confusion, you are paying more than you owe.
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A little research could save you BIG on interest.