Posted by: islamicfinancingnews | September 30, 2012

Consider the benefits to refinancing Islamic mortgages

Just as the popularity of Sharia compliant Islamic finance is gaining momentum in North America, home prices across the U.S. have been rising according to the recently released Standard & Poor’s/Case Shiller index showing a 1.2% rise in national housing prices for July of this year, compared with the same month in 2011.

President Obama is urging Congress to approve a mortgage refinance plan proposed in February that he suggests would provide approximately $3,000 in savings per year by allowing responsible homeowners to refinance their mortgages at historically low interest rates. According to Obama, allowing homeowners to refinance debt at lower lending rates would prevent foreclosures and in turn, create new jobs and help the struggling economy. Meanwhile, the legislation’s estimated cost of $5 to $10 billion is one reason Republicans in Congress have rejected the proposal to date.

While the President must await the return of Congress after the November elections to find out the outcome of his plan, you should know there are many good reasons to consider refinancing Islamic mortgages that avoid Riba. Extending the term of the loan to reduce your monthly payment; consolidating other debts into one lower monthly payment; or taking advantage of low interest rates by changing from a fixed rate mortgage to a variable rate are all excellent examples.

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