Protect and Defend

Welcome to my blog, Protect and Defend. You don’t have to understand me. You only have to agree with me. I can live with losing the good fight, but I can not live with not fighting that good fight at all. - Publius

Saturday, October 21, 2006

Why Muslims can’t buy your home

From The Washington Post Real Estate Section (October 21, 2006).

Islamic law forbids Muslims from earning or paying interest. Here are some ways no-interest home purchases are structured:
- Co-ownership (Musharakah): The firm and the individual purchase the home jointly. The firm typically owns the larger stake because it usually provides most of the money. The individual then makes a monthly payment that includes a fee to cover use of the firm's share of the property. With each payment, the individual gains equity in the house until he owns it.
- Lease to Purchase (Ijara): The firm buys and then rents the home to an individual. This works much like car leasing. The monthly payment covers rent and a fee; the balance accumulates toward purchase. The parties agree that the firm will sell the home to the individual by a certain date.
- Installment Credit Sale (Murabaha): The firm buys a house and then sells it to the individual for the purchase price plus an agreed-upon profit. The amount remains fixed for the buy-out period. The full price may be paid at the time of purchase, at a fixed point in the future, or through a series of deferred payments. This is the model used by stores to sell goods on credit.

SOURCE: Guidance Financial Group, Islamica magazine.


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