Religious freedom in finance?
November 5, 2008 2:01 PM Subscribe
Can a non-Muslim get a mortgage loan from an Islamic bank in the USA?
Do you have such a bank anywhere near you? I'm sure they'd be happy to answer any questions like this. It's getting them to stop calling once they have your number that will be the hard part (or maybe that's just my bank).
And like gauchodaspampas says, I doubt they can deny you on religious grounds, since that would be discriminatory.
posted by cjorgensen at 2:26 PM on November 5, 2008
And like gauchodaspampas says, I doubt they can deny you on religious grounds, since that would be discriminatory.
posted by cjorgensen at 2:26 PM on November 5, 2008
You might want to check and see if the halaal financing actually saves you any money. Just because the structure is different, it doesn't mean your out-of-pocket is.
posted by Pastabagel at 2:27 PM on November 5, 2008
posted by Pastabagel at 2:27 PM on November 5, 2008
Pastabagel, from what I know, down payments are usually much larger. Beyond that, I don't know how the costs compare. Anyhow, the asker didn't actually say they are looking to get halaal financing. They could just be curious.
And one more point. I guess since halaal financing isn't structured as loans, maybe the laws that cover discrimination in home loans, and perhaps other types of loans, don't apply in the same ways. Just a thought. It would still surprise me though, if my original guess was wrong. But I guess that's getting into territory where someone needs to actually check the facts. I have to go though, so hopefully someone more knowledgeable than I can answer soon.
posted by gauchodaspampas at 2:37 PM on November 5, 2008
And one more point. I guess since halaal financing isn't structured as loans, maybe the laws that cover discrimination in home loans, and perhaps other types of loans, don't apply in the same ways. Just a thought. It would still surprise me though, if my original guess was wrong. But I guess that's getting into territory where someone needs to actually check the facts. I have to go though, so hopefully someone more knowledgeable than I can answer soon.
posted by gauchodaspampas at 2:37 PM on November 5, 2008
You may want to check out this article in the Washington Post. There are bank names in there that might get you started.
posted by proj at 2:55 PM on November 5, 2008
posted by proj at 2:55 PM on November 5, 2008
Best answer: This question motivated me to finally signup for an account.
I recently obtained a mortgage from Guidance Financial, an Islamic institution that offers interest free loans. There should be no problem getting a loan from a company like this even if you're not Muslim. In fact, a lot of their employees seem to be non-Muslim.
Muslims try to stay away from interest so Guidance offers a partnership program. However, their program pretty much emulates a 30 year fixed loan. It offers you the same benefits of a regular loan (tax benefits, legal protection, etc.). I am sure there are one or two exceptions, but that isn't the norm.
As for the costs, their down payments aren't any greater (10-20% expected). Their interest rate (technically it is called a rental rate or something like that) is not the cheapest, but it is not ridiculous either.
Overall, I have been pleased. Still, if I weren't Muslim there is no way I would get one, due to the slightly higher cost and the lack of options (your only option is a 30 yr fixed).
posted by dumdummy8 at 3:11 PM on November 5, 2008 [2 favorites]
I recently obtained a mortgage from Guidance Financial, an Islamic institution that offers interest free loans. There should be no problem getting a loan from a company like this even if you're not Muslim. In fact, a lot of their employees seem to be non-Muslim.
Muslims try to stay away from interest so Guidance offers a partnership program. However, their program pretty much emulates a 30 year fixed loan. It offers you the same benefits of a regular loan (tax benefits, legal protection, etc.). I am sure there are one or two exceptions, but that isn't the norm.
As for the costs, their down payments aren't any greater (10-20% expected). Their interest rate (technically it is called a rental rate or something like that) is not the cheapest, but it is not ridiculous either.
Overall, I have been pleased. Still, if I weren't Muslim there is no way I would get one, due to the slightly higher cost and the lack of options (your only option is a 30 yr fixed).
posted by dumdummy8 at 3:11 PM on November 5, 2008 [2 favorites]
If you find one that refuses you based on religious grounds, I'm sure the feds would love to know about it.
posted by mattholomew at 6:16 PM on November 5, 2008
posted by mattholomew at 6:16 PM on November 5, 2008
I thought seriously about going this route and did not find any objects from anyone. (My name and pigment are pretty obviously non-Muslim.)
In the end, when I mapped it out, I didn't see the benefits I had expected, so went with traditional mortgage (which was slightly sweeter because of a corporate deal.) It looked a little better to me than what dumdummy8 describes, but was not better than the normal deal. Muslims may have some ideas about usury being bad, but they're not anti profit!
posted by Lesser Shrew at 6:58 PM on November 5, 2008
In the end, when I mapped it out, I didn't see the benefits I had expected, so went with traditional mortgage (which was slightly sweeter because of a corporate deal.) It looked a little better to me than what dumdummy8 describes, but was not better than the normal deal. Muslims may have some ideas about usury being bad, but they're not anti profit!
posted by Lesser Shrew at 6:58 PM on November 5, 2008
Best answer: Muslims may have some ideas about usury being bad, but they're not anti profit!
That's definitely true. You still have to pay for the time value of money, even in Islamic financing. Here in Malaysia there are lots of banks with Islamic financing options, and they are definitely open to all people, muslim or non. The whole argument of Islamic financing is that it is better for everybody. You decide, of course.
There are two basic ways Islamic loans can be structured, one is the rent-to-own kind of arrangement that dumdummy8 described. That is known as "musharika mutanasiqah", where the house is bought by the bank and then rented to you at a fair market rental price, plus a sum that pays against the house. Thus you gradually own more and more of the house and the amount of rent you pay goes down. All the halal financing in the US uses this model, AFAIK. The other is al-bai' bi thaman ajil, which is simply a reselling arrangement where the bank buys the house for agreed-on selling price, and then sells it to you at a higher price that includes their profit and is directly set to X years of interest payments at the going rate of interest. It has been criticized because it is interchangeable with conventional financing in practice, although in principle it is different. It isn't interest - it just costs exactly the same.
The former system is arguably "more halal" because the bank is not guaranteed a fixed percentage of profit. The monthly rent payments could go down if the housing market in your area goes down, for example. The latter concept is more common in Malaysia, probably because it is simpler and cheaper. Here is a paper comparing the two systems, if you're interested.
(For the record, there are pigment-disadvantaged muslims as well)
posted by BinGregory at 9:01 PM on November 5, 2008 [1 favorite]
That's definitely true. You still have to pay for the time value of money, even in Islamic financing. Here in Malaysia there are lots of banks with Islamic financing options, and they are definitely open to all people, muslim or non. The whole argument of Islamic financing is that it is better for everybody. You decide, of course.
There are two basic ways Islamic loans can be structured, one is the rent-to-own kind of arrangement that dumdummy8 described. That is known as "musharika mutanasiqah", where the house is bought by the bank and then rented to you at a fair market rental price, plus a sum that pays against the house. Thus you gradually own more and more of the house and the amount of rent you pay goes down. All the halal financing in the US uses this model, AFAIK. The other is al-bai' bi thaman ajil, which is simply a reselling arrangement where the bank buys the house for agreed-on selling price, and then sells it to you at a higher price that includes their profit and is directly set to X years of interest payments at the going rate of interest. It has been criticized because it is interchangeable with conventional financing in practice, although in principle it is different. It isn't interest - it just costs exactly the same.
The former system is arguably "more halal" because the bank is not guaranteed a fixed percentage of profit. The monthly rent payments could go down if the housing market in your area goes down, for example. The latter concept is more common in Malaysia, probably because it is simpler and cheaper. Here is a paper comparing the two systems, if you're interested.
(For the record, there are pigment-disadvantaged muslims as well)
posted by BinGregory at 9:01 PM on November 5, 2008 [1 favorite]
(For the record, there are pigment-disadvantaged muslims as well)
Yeah, I thought that was a weird racist comment, even if it wasn't intended as such, and it exemplifies the general lack of knowledge most people have of Muslims. I'm as white as they come, despite being a brunette, but nearly all of my Muslim cousins are blonde and blue-eyed and don't go out between 10AM and 2PM even on cloudy days, because they sunburn so easily!
posted by Dee Xtrovert at 2:27 AM on November 6, 2008
Yeah, I thought that was a weird racist comment, even if it wasn't intended as such, and it exemplifies the general lack of knowledge most people have of Muslims. I'm as white as they come, despite being a brunette, but nearly all of my Muslim cousins are blonde and blue-eyed and don't go out between 10AM and 2PM even on cloudy days, because they sunburn so easily!
posted by Dee Xtrovert at 2:27 AM on November 6, 2008
Religion, like gender, race, national origin and whatever I forgot to list, is a protected category, and you may not be denied services based on religion or other protected category.
posted by theora55 at 2:14 PM on November 6, 2008
posted by theora55 at 2:14 PM on November 6, 2008
This thread is closed to new comments.
Or rather, what I think you're asking, is, can a non-muslim obtain halaal financing in the US? To which the answer, I think, is yes.
What makes it align with Islamic law is that it's not arranged as a loan. Halaal financing is arranged as a partnership. The financier owns a share in whatever it is you're financing, and you gradually buy them out, plus a fee so that you can maintain 100% control, rather than paying back a loan plus interest.
Anyway, I see no reason why a non-Muslim couldn't get halaal financing. It's not strictly Islamic any more than kosher food (or halaal food for that matter) is strictly Jewish (or Islamic). Its just is set up in ways that align with Islamic law. And it'd probably be illegal to deny non-muslims financing based on their faith.
posted by gauchodaspampas at 2:11 PM on November 5, 2008