Anyone here used one of those Islamic Mortgage companies e.g. Guidance, UIF, etc.? How has your experience been?

I found that they charge a higher interest rate but call it admin fees etc. at the end of the day it's all the same thing

Hmm..thanks for the input D1
I can appreciate/accept the research of scholars that this is a permissible avenue of mortgage but I find it hard to trust things that are managed by a bunch of “uncle” type dudes lol

To me it was a big scam unfortunately :( they have you sign standard mortgage docs and then sell it to Fannie Mae. The only difference is that they charge a higher interest rate

Halal inc is not in business. Guidance is the closest to being compliant however I believe firmly after 15 years of renting and then buying with Guidance based on the fatwas, these Islamic mortgage companies are a sham and you end up Paying EVEN MORE which not one Scholar could give me a rational defense for. studied Islamic law for 10 years and have a Masters in Finance. The only thing you have is a chance on the Day of Judgement saying so and so Fatwa said it was permissible to buy, that’s what you are paying for. Hint: many of those giving the fatwas to these companies get paid to say yes its permissible.

god bless C1
The fellows position seems like an outlier but that’s neither here nor there

In the past when trying to do research I didn’t feel comfortable with representatives....decisions decisions (...or lack there of lol)

@OP I would suggest you look into Halal Inc. I have heard many good things about them and from my understanding there are no fees/interest/etc. Their program creates an LLC in which Halal Inc and the homeowner own jointly and over time the homeowner can choose to slowly buy out Halal Inc. Their model allows for a completely debt free and interest free solution. And from their website they offer an “Any Scholar” guarantee that their model will pass the scrutiny of any scholar.

#notpaidforbyanyone lol....just an option I would certainly consider to buy my home

How does halal inc make money?

@A1 from what I understand they make money through selling shares in the LLC to the homeowner because as the home appreciates the shares become worth more and therefore the purchase price goes up. So it is like any of those real estate investors that buy houses and then flip them. Only difference is that this company sells the shares in the LLC which owns the home as an asset.

I would suggest that you take a look at the informational material on their website because it explains the details much better than I ever could. But as far as I understood the house would sell off share at the assessed market price higher or lower

I haven't tried personally, but have heard similar feedback.. that's it's basically the same thing as regular loans and sometimes more expensive.

I've also recently heard that a scholar (Ghamdi, I think is how you spell it) said that interest is *not* Haram when used for means of living for example mortgage, car loan etc.

Seems his opinion differs most just about every other scholar, from what I've heard.

I'm currently renting and not in a place to try and buy yet, I've gone back and forth on whether i'd want to get a loan and buy or just rent .. not sure what I'll do when the time comes.

I hear you lol, iA it works out whichever route you choose.

That's assuming the property appreciates. If the property value drops than the share should also. Also assumes property value appreciates immediately after purchase. Moreover who would valuate. It seems like a bigger mess if anything.

conflict of interest? YES

I have ratified contract and deciding to chose lender (Conventional/Islamic). I feel I did extensive search on Islamic Shariah mortgage because I am in the process of buying home and I don’t want to use conventional banking. First here is what Dr. Zakir Naik point of view on Islamic and conventional mortgage https://youtu.be/nzPgEvSDrLU another link https://youtu.be/BmaMZSBOqS4

Now my own research: Difference between Islamic finance and conventional banking purely Riba/interest. Conventional bank lends you money on money no actual commodity/thing etc that is why it’s Riba. To make it Islamic or Shariah complaints lender either needs to buy the home first or any product/commodity and take possession of it and then sell to borrower with fixed profit (could be mutual agreed amount/could be rent/partnership etc) with Fixed duration. Whereas, conventional don’t take possession of a property!

Conventional banks will come after your personal assets (banks account etc), which is more hardship or debt. Whereas Islamic financing won’t touch your personal assets.

Conventional banks will charge late fees at the rate of lets say 5% or interest rate so if your monthly mortgage is $5000 so your late payment would be $250 where as UIF I believe charges $15 and Guidances Residential charges $50 despite the fact how much you pay per monthly mortgage and they call it an administrative fee/charges etc. I personally think UIF or Guidance etc charging low fee is better then conventional but that late fee is a big question mark because it’s not shariah complaints per my research. One of the mufti told me that Above everything was ok with Islamic finance but charging late fee would be considered as Riba. I am waiting to hear more info from Mufti as I told him that they are charging very low fee compare to conventional banks and and they name it administrative fee (so dar I have received any update from Mufti on this)

Per my research on internet and also spoke to mufti and discuss all above, mufti told me that even if a conventional bank buy a property and then sell it to you with higher price with a fixed monthly rate (should not change) with no late payment charges then that conventional bank loan is permissible. He further elaborated, if you have land and you need money to construct a home and if conventional bank or any bank or company Islamic or not if they purchase all raw materials machinery etc for your land to construct and then they lend that material/machinery etc to you with higher price and ask fix the rate with you with fix duration that is also permissible will not be considered as riba/interest (no late payments, fixed rate (should remain unchange) and for fixed agreed time) because they are not lending money on the basis of money. They are lending money on actual commodity.

Conventional bank do not share loss with you which creates more debt on borrowers in case of foreclosure or natural disasters etc. Islamic bank or lender are partners (Diminishing Musharakah/ Murabaha etc).
Here is what I asked from UIF:
Let's say current price of property is $100,000 and my down is 5% which is $5000 and UIF $95000 and the rate is 5%. After 2 years or any time in the future I want to refinance and the rate is 3% and (my ownership share 20% and UIF 80%) the property price reduced/loses its value. The property price is calculated per market value as $80000 (originally it was 100,000). In this situation how much is my gain or loss? Answer from UIF agent: You lose your $5000 and we loose $15000 (it was text msg)

I hope this comment with help others understand difference between riba and riba free financing.

Yes I went with guidance for my first home purchase . Overall good experience.