When The Wife and I bought our home back in November we took a look at the papers during the closing signing. When we saw how much we’d be paying in interest over the course of the loan we made the decision to pay it off even faster than originally planned by monthly over payments targeted straight at the principle of the loan.
We’re on course to have our 30yr paid off in 15.
But after seeing this, I think a lawyer might be cheaper.
For many Minnesota Muslims, it’s been virtually impossible to buy a home, because Islamic law forbids the paying or charging of interest. To help close the home ownership gap among Muslim immigrants, the state’s housing agency has launched a new program offering Islamic mortgages.
Islamic law does make exceptions to the ban on interest, if one’s family is at stake. But the exceptions are open to interpretation and for many observant Muslims, conventional mortgages are strictly taboo.
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The program is targeted at low-to-moderate income families. Qualified applicants have to complete first-time home buyer education classes. The goal is to help Muslim home buyers build wealth and reap the benefits of home ownership.
The deal is called “Cost Plus Sale” and from what I can find, they’ll be paying 10% less than The Wife and are by paying ours off in half the time under our prime rate loan.
I don’t care about private institutions doing this. I can decide whether or not to do business with them because of their business practices. This is straight up discrimination because of one’s religion or lack of.
I hope the state of Minnesota pays long and deep for this when someone in that state grows a pair and hires a lawyer.
Well this is bullshit.
The problem I have with it is that it is State supported. They have no business being in competition with banks who are perfectly free to offer such plans. If this were a ‘Christian Mortgage’ do you think there would be support for it? Doubtful.
But I don’t see how they are going to be paying 10% less. According to the article:
“The deal is identical to a thirty-year fixed-rate loan, except there’s no additional interest, because the higher up-front price factors in payments that would have been made over the life of a traditional mortgage.”
That sounds to me like they are rolling up all the interest payments into the cost of the loan so that in the end they pay the same, and actually they can’t pay it off early like you and I can because there is no interest component to the loan.
Essentially, they’re giving them an above prime rate and doing the calculations from that figure. I was being very conservative on the dollar figure. They’re probably saving them closer to $25-30K because of the interest rate.
Normal math-calcs for a prime rate 30yr contract more than double the cost of the house, and I seriously doubt that they’re doing that as well.
My biggest problem with this program is also that the gov’t is involved. If these 6th Century types want to own homes, they either need to work with a private loan company, save up and buy outright or melt into the American pot and deal with interest.