Are you planning to buy a house?

[Baashi]

AJ,cynic aren’t u!

Ok let’s understand this thing together. Some of us want to be smart and rent to own (instead of rent to lose). After all, we are going to pay our rent anyway! We might as well turn the whole thing around and make it these rent payments as payment of a house we are going to own. We happen to embrace a belief system that makes interest and predatory lending unacceptable. The western economic system and our belief system are incompatible. What do we do? There’re no short cuts here. This is black and white. Now there are well-off folks who happen to share with us the same belief system. They scratched their brilliant heads and said there must be a way. They first look to Gulf Arab businessmen for capital to invest this untapped market. It didn’t work out. I remember when I came here there was al-amal banking but they didn’t last that long.

 

That is the background. Moving on to the heart of the matter which is how do they sustain the fiscal balance if they don’t charge an interest. Surely, somehow someone has to lose money on this otherwise they are gonna get bankrupt in no time. Agreed! This is how they pulled off: they get a group of investors who want to remove the obstacles Muslim face in the housing market or for that matter other business that need to borrow money without being charged interest. They come up the money and everyone in that group who contributed money in the pool becomes an investor and shareowner. Let say, for instance, they got $29 millions for a start. If they buy 100 houses in a year, they will be broke in the first year right? Here is where Fannie Mae comes in. At this stage, you need to look this organization up and understand how Fannie Mae works and how they help first-time homeowners and their pledge to expand its so-called “American Dream Commitment†and all of that crap. We’ll also be better off if you could have the definition of these two terms (liquidity, mortgage) handy.

 

What Fannie Mae does is they purchase “mortgages†from lenders. If you are a lender that serves for a minority group, the FM will give an extra break. Couple that yours is a minority owned lender, that’s even better. Now LARIBA is minority oriented finance company and it serves a minority community. What this group are doing is they use their own money to purchase a house for the customer. Remember they don’t borrow the money (they had their $29 million) from Bank thus there are no interest crap going in the transaction to begin with. Since LARIBA is Fannie Mae approved finance company, Fannie will purchase the house LARIBA had just bought for the customer from the LARIBA in a week. LARIBA pledged unlike Banks for not charging interest on its money in that week.

 

Are you with me here AJ! LARIBA gets its money back and ready to buy a house for more Musloms. Fannie Mae fulfilled its mission to provide the lenders with a more liquid assets by giving cash back to the lenders. The Muslim consumer got a house without paying any interest on the transaction. Had he opt to go to the bank, he would have paid interest (on the mortgage) to the bank.

 

The only catch I can think of is the administrative fees. It is “khidmo†you pay the janitor don’t you? Same here you pay the folks who are handling the process. They are selling their services to do this work for you. I don’t pretend to know everything here but this is the best I can do. You decide.

 

Now Nina Brown, I’m sure you mean good but before you confuse yourself do what I do. Ask urself this I know that Riba is haraam maqdac ah ok? right! and I am smart enough to understand the definition of riba and what it entails right? Now I buy a shirt from the mall every now and then. The price is $35 plus 8% tax and that’s what I pay without worrying about riba. Same is here bro. The price of the house is $200K and that’s what I’m going to pay period. If I pay more than that then I know something fishy is in the air. You got the contract before you signed it, you read or you got your auditor take look at it and if it’s true you go for it. I know it’s too good to be tree but it’s true.

 

Sigh! hope i helped u there.

[BN]

Thanks Baashi, that was a very good explaination. But how does it work in Canada as there are no Fannie Maes or Freddie Macs?

[Raxmah]

Salaams,

 

Another group who also do home financing are the Samad Group, based in Ohio. I heard they were strictly Islam.

 

Website

 

The most important thing is to note that they have a shariah advsiory board, and read the background of the shariah advisors.

[N.O.R.F]

I've been looking into this for over a year now, some of my muslim freinds have already bought properties and currently renting it out to students. The property game is very enticing, i have managed to focus my efforts on finding the right deal, still looking.

[Diamante]

I wouldn't mind buying a little cosy cottage high up the moors of Scotland.

[Nomen nescio]

Baashi.. Am not cynic anymore saxib but let me ask u this... what does it take to qualify for one of them lariba loans.. ?

[Baashi]

Good question BN, I don’t know the answer! LARIBA can help you if you reside or want to buy a home in US and Egypt.

 

AJ, if you have a job, are creditworthy (they use your credit report to determine that), and are able to put down 5% (at minimum) of the total price of the property you want to own or the business you wanna buy, then you have a deal. How does that sound buddy?

[Nomen nescio]

Baashi...

 

 

 

 

 

 

 

 

The above house is a 3 Bed, 3 Bath 1,882 Sq. Ft. in Blain MN and the asking price is $324,900 if i choose to go with a bank and pay 5% as a downpayment ($16,245.00) at a 5.6% interest rate on a 30 year mortgage my monthly paymt will be $1,774 a month..

 

But if i choose to go with Lariba then i and pay 5% downpayment ($16,245.00) on a 30 year mortgage with no interest my monthly paymt will be (((324,900 - 16,245) / 30 )/ 12) = $876.00!!!!

 

For a house that big $876.00 is just too good to be true...

[Baashi]

^I told you so