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buying houses? [w/out interest]

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buying houses? [w/out interest]
Anonymous
03/03/02 at 23:05:54
salaam everyone,

I'm a little curious to how Muslims buy houses without paying interest.  Most
everyone I know has dealth with it at some point or another unfortunately BUT I'm
sure there has to be a way around it.  I was told you can rent houses but what
other options do you guys know of?

All your help is greatly appreciated
wa salaam
Re: buying houses? [w/out interest]
humble_muslim
03/04/02 at 14:04:41
[slm]

Yes, this is a big problem. Alhamdolillah, there may be a solution soon.  HSBC, an international bank, is going to start offering Islamic compliant house financing this month in NY state (you lucky Albanians!).  Not sure when it will spread to other states, but if anyone knows of an opening for a UNIX/C software engineer in NY state, let me know.  I'd be more than willing to re-locate if I could buy a house without Riba.

Contact person in HSBC for this project is :
Tariq Al Rafai
212 525 8046
NS
Re: buying houses? [w/out interest]
bhaloo
03/05/02 at 02:37:22
[slm]

Well there already are solutions out there, La Riba (no riba) is one very popular choice, it was started by Dr. Yahiya (people in the Los Angeles area will recognize him)

http://www.lariba.com


And I know Houston has some options as well, and I imagine other areas where there are a lot of Muslims.

Basically the way the la riba system works is that you enter into a partnership with them to purchase a house.  Let's say you have 40% of the money, and they provide the other 60%.  Let's say the term of payment is for 30  years.  What la riba asks you to do is find out what the rental rate is for your property in that area.  Let's say its $3,000.  Since you own 40% you have to pay 60% to la-riba to use their portion, so that's $1800.  In addition to this you need to pay extra money to purchase shares in the property.  If for example the house is $100,000 and you pay an extra $10,000 that's 10%, so now you own 50% up from your 40%, and consequently your rent would become $1500.   Anyways the amortize it over the term of your loan and they look at rental values.  They come up with a rate, and I think its pretty close to bank rates, maybe a little higher.  That's a brief breakdown of how it works.
Re: buying houses? [w/out interest]
humble_sister
03/05/02 at 12:45:56
[slm]

LaRiba is definitely a great organization.  Unfortunately, their licenses in Chicago have expired.  They are in the process of renewing them, and it might take 2-3 months.  Which means they cannot conduct any new loans until then.  One of the loan reps there was very optimistic and seemed hopeful that by the grace of Alah (SWT) everything will work out.  If anyone happens to know of any alternatives available in the Chicago area, I would appreciate you sharing it.

Jazakallah khair.
Re: buying houses? [w/out interest]
humble_muslim
03/05/02 at 13:31:20
[slm]

Moderatos, please delete this if you think it's not appropriate.  A friend of a friend had a bad experience with Lariba a few months ago.  They took so long over getting him the money that the closing date for his house passed.  He went ahead and got a conventional mortgage in 24 hours.

My personal experience with almost ALL Islamic finance insttituons is that they are VERY unprofessional, and cannot be trusted.  Sorry to sound pessimistic, but that's the truth.
NS
Re: buying houses? [w/out interest]
Kashif
03/05/02 at 20:47:50
assalaamu alaikum

In the UK there is www.iibu.co.uk

My uncle said he heard Eddie Georce, the Governor of the Bank of England, identify the market for Islam-compliant loans as on the verge of booming, and that banks would be introducing products in a few months to cater for interested parties. I'll keep you updated insha'Allah.

Alhumdulillah for this. However, its sad that not enough Muslims could band together to offer this product to us in a viable form sooner - even if such a scheme made them mega-rich! Because whose pockets will your hard-earned cash line now?

Kashif
Wa Salaam
NS
Re: buying houses? [w/out interest]
struggling
03/05/02 at 21:24:14
sorry it was the wrong link i posted earlier... moderators can you delete it, please

right one is:

http://news.bbc.co.uk/hi/english/business/newsid_1826000/1826834.stm
Re: buying houses? [w/out interest]
Kathy
03/05/02 at 22:34:41
[quote author=The humble muslim link=board=madrasa;num=1015214754;start=0#1 date=03/04/02 at 14:04:41] [slm]

HSBC, an international bank, is going to start offering Islamic compliant house financing this month in NY state
[/quote]

[wlm]

Do you have a web site link addy for this?
NS
Re: buying houses? [w/out interest]
momineqbal
03/06/02 at 03:28:11
[slm],

humble_muslim, I think I know that case. One of my uncle's friend in (near boston) faced this thing and my uncle is thus having second thoughts about buying a house.

Some other thing I have heard from some people that these kind of financial concepts (like that of Lariba) need to be revisited by muslims. Upon close scrutiny they seem to be the same as other banks offering loans on interest. Imagine banks like citibank/HSBC opening up Islamic banking divisions, organisations that solely survive on interest something doesn't seem right to me with that. But Allahu Alam.

Wassalam
Re: buying houses? [w/out interest]
M.F.
03/06/02 at 07:12:51
Wow ma sha Allah!  It's great to hear about all the Islamic lending organizations there are in the US now!  It means Muslims are finally having an effect! Al hamdu lillah.
Now my question is: how can we Muslims in Muslim countries get around riba??????  It's everywhere!!!!!   :(   Credit for buying cars , houses, furniture, even school supplies!  Al hamdu lillah some stores have interest free buying over a certain period of time for home appliances and sometimes for furniture, but for property?  Riba riba riba, that's all there is.
Re: buying houses? [w/out interest]
Caraj
03/06/02 at 10:41:27
Good Question M.F.
I cannot suggest anything for those outside of the US but in the US here are some suggestions.

1) Till I married last July I hadn't paid rent nor elect nor phone for a while back. I always lived on farms and ranches where I worked min hours so as to continue my business which makes more than farm work.

When I met my husband I was a caretaker for a horse ranch. I fed and cleaned and cared for almost 30 horses. Foaled out mares. This took about three hours a day sometimes four. Half in the am and the other half in the pm. I over saw the other workers too. In exchange I was given a two bedroom two story home elec and phone included.  This home I had to myself.

If you can find horse farms, dairies even llama and kennel buisnesses quite a few have living quarters. If you bank and save what you would pay in rent in 5 yrs or less you can buy a small place cash.

My friends bought a 10 acre place and built their own place and in the end cost maybe $50,  to  $60,000.  They had an electrical contractor but they did the walls and poured the concret themselves on week-ends and in the summer. The place has 4 stalls, a huge barn apartment, hay storage and is built better than most homes I see.  If you work week-ends and summers building and work a little harder and put 5,000 to 15,000 into building a year in 5 yrs or so you have a place paid for in cash and the family will have learned new skills building andall in the family will have the satisfaction of having build their own home.

Furniture, cars, school etc. I would suggest do your very best to pay cash. If there is a living room set you want put it on lay-a-way with the agreement in advance that as you pay each piece off you can take it home not wait for the whole set to be paid off. I'll tell you the satisfaction in waiting and paying cash and the lack of stress making the monthly creditor payments are worth the wait.

Wouldn't you rather sleep on a mattress on the floor and have peaceful sleep than have a nice furniture set that you toss and turn wondering where the next payment is coming from?

I know I am getting off the subject here a bit but there are ways to get living quarters and save to buy cash for a place. Doesn't work for everyone but this may help someone. Single folks, offer to feed horse at a stable and clean after school in exchange for a barn apt. Families can get a small home on a dairy or horse farm. Some will hire you full time and give you wages and a home while others only need a couple or three hours work each day and have no cash flow to pay an employee but have a small older home or mobile on their place they will exchange for help.

Will later do a post on self-employment as a while back on the old boards I was messaged by a few sisters about self / home employment.

But my advice as to credit and mortages ... save save save save and pay cash when you can. If you can wait ... Credit is instant gradification cause you get what you want NOW and a lot of times leads to stress. Waiting and saving puts off the gradification but let me tell you it is much beter and well worth the wait.  Hope this makes sense.
03/06/02 at 10:49:20
Caraj
Re: buying houses? [w/out interest]
humble_muslim
03/06/02 at 11:53:27
[slm]

Eqbal, Kathy

The web site for HSBC Islamic Finance is :

www.amanahfinance.hsbc.com

Check out their Shariah Supervisory Commitee.  Taqi Usmami is known thruout the muslim world as a scholar who does NOT comprimise on Riba.  I have also talked to HSBC myself, the scheme sounds just like a halal muhabara tranasction.  Plus the profit they make will cost the homeowner the same amount as a traditonal fixed rate mortgage.  So I, at least, have no qualms about the halalness of this scheme.

Kashif, the problem in the US, like I said, is a lack of professionlism from the muslims who tried to enter this arena.  Otherwise, yes, it's a potentail huge business oppurtunity.

NS
Re: buying houses? [w/out interest]
Caraj
03/06/02 at 12:30:24
I don't mean to sound so ignorant but I've not ever been out of the US.
In other countries, and specifically Muslim countries are there dairies, horses farms, kennels for pets while pet owners are away on trips, places where one could work in exchange for shelter or are these type places small and family owned and operated? Are there NON animal type businesses where you can work for a business owner for a room or small apt till one could save to buy a home?

Is buying land and homes expensive? I hear wages are much different in some countries.

I see where people say charging interest is wrong, is there something saying why it is wrong?

If you raise animals for food and say a sheep cost you $100 to raise to butchering age and you sell it at a profit for $200 is making such a profit wrong such as in charging interest?

Be it food, a car or a home isn't interest another name for profit? Another name for business?
No disrespect meant I only wish to understand.  
Thank You.
03/06/02 at 12:34:49
Caraj
Re: buying houses? [w/out interest]
se7en
03/06/02 at 20:57:52
Cara,

I don't know much about economies outside the United States, but I came across [url=http://www.islamiq.com][this][/url] website that I thought was interesting.  There's some info there on financial transactions that are "shariah compliant" (Islamic-law compliant), so I thought that would be on interest to you :)

Also, [url=http://www.witness-pioneer.org/vil/Articles/economics/default.htm][here][/url] is a link to a whole bunch of articles on Islam & Economics.

[quote]I see where people say charging interest is wrong, is there something saying why it is wrong? [/quote]

Well here are a few verses from the Quran on interest/usury:
[color=black]
Do they not see that Allah enlarges provision and restricts it, to whomsoever He pleases?  Verily in that are Signs for those who believe.

So give what is due to kindred, the needy, and the wayfarer - that is best for those who seek the Countenance of Allah, and it is they who will prosper.

That which you give in usury for increase through the property of (other) people will have no increase with Allah: but that which you give for charity, seeking the Countenance of Allah will increase: it is these who will get a recompense multiplied.  -- 30:37-39
[/color]

Islam teaches us that we must be just - in our behavior, in our words, and also in our financial transactions.  I think part of the wisdom behind Islam's prohibition of interest/usury stems from that sense of justice.  Interest is an institution that allows for exploitation.  It allows people to be subjected to a type of economic enslavement - chattled to debt their entire lives and unable to break free.  The actions of the IMF and the World Bank are a good example of this, I think (which you can read more about [url=http://www.globalexchange.org/wbimf/facts.html][here][/url])

I think this is Kashif's area of expertise so perhaps he can elaborate :P

wasalaam / peace
03/06/02 at 21:01:20
se7en


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