Posted by: islamicfinancingnews | October 27, 2012

A few calculations can help determine your readiness for Islamic mortgages

When you are thinking about applying for Islamic mortgages free from Riba to assist you in the purchase of your first home, the decision usually comes down to finances. Here are some guidelines to follow to see if you’re ready for this type of financial investment.

First off, calculate your monthly debt payments. Add up all the payments you are required to make each month including credit cards, student loans, personal loans, lines of credit, and any kind of installment type payments so you can have an objective look at your debt load.

Next, total your monthly expenses. Add the monthly household expenses to the monthly debt payments above. This will help you decide whether you need to cut back from one area of your budget or another to be able to afford a monthly mortgage payment, or if you are in a good position to move forward in your plan to buy a home. The size of the down payment together with the current mortgage interest rates will be elements in determining the type of house you can afford as well.

In addition to these factors, there are certain limits you need to consider. One that may surprise you is the suggestion that homeownership costs should not exceed more than 32 percent of your gross monthly income which is the income you make each month before taxes and other deductions. Talk to your lender who can evaluate your situation to see if you pre-qualify for one of the Islamic finance options available to purchase a home.

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