Consumer Corner
What are halal mortgages?
Shariq Siddiqui, Indiana University
The growth of “halal mortgages” over the past 20 years has expanded financial access to homeownership for many Muslims. Halal mortgages provide interest-free loans in keeping with Islamic beliefs.
These mortgages are available in over 80 countries that have a significant Muslim population, such as Saudi Arabia, Iran, Malaysia, United Arab Emirates, Kuwait, Qatar, Turkey, Bahrain, Indonesia and Pakistan, where they account for the vast majority of the global US$3.9 trillion Islamic finance economy.
Access to halal mortgages has been growing in the United States. Until 1997, no financial institution was willing to offer halal mortgages, but in 2024, over 25 banks had made them available.
The Conversation asked Shariq Siddiqui, assistant professor and director of the Muslim Philanthropy Initiative at Indiana University, to explain halal mortgages.
What are halal mortgages?
Halal mortgages are a tool of Islamic finance and offer an equitable way to gain homeownership. They emphasize risk-sharing and mutual cooperation with the aim of checking unfair exploitation and wealth accumulation in the hands of a few. In such a system, money is a means of exchange rather than a commodity that generates profit.
What are the religious roots of Islamic finance?
The Muslim holy book, the Quran, and the sayings of the Prophet Muhammad, the Sunnah, prohibit riba, (interest), maisir (speculation) and gharar (uncertainty or uneven risk).
For example, the Quran says, “O you who believe, do not eat up the amounts acquired through ribā (interest), doubled and multiplied. Fear Allah, so that you may be successful.”
Over time, Muslims have sought to develop systems that adhere to these rules. These include bonds that do not receive interest but are based on profit-sharing; socially responsible mutual funds that comply with ethical rules; and insurance that provide protection through a communal fund.
Since World War II, however, monetary policies in the global financial market are largely based upon interest.
How does Islamic financing work in modern context?
In the modern context, Muslims use contract law for economic activity and offer home mortgages without interest. For example, as an attorney, I would develop mortgage contracts that would allow buyers and sellers to transact without interest. This “mortgage” contract would be recorded with the county.
Traditionally, there are three kinds of halal mortgages. In the first, known as ijara, the bank purchases the property and leases it to the homeowner; the homeowner pays rent, principal payments and bank charges; the buyer’s share in the home remains the same until the entire loan is paid off.
Diminishing musharaka is another type of joint ownership plan between the bank and the buyer. The buyer makes principal monthly payments and pays bank charges rather than interest. With each principal payment, the ownership of the buyer increases and the bank’s ownership decreases.
In the third type, murabaha, the bank purchases the home and resells it immediately to the buyer at a higher price – termed as profit. The buyer typically pays a 20% down payment. Thereafter, the buyer makes fixed interest-free payments until the loan is paid off.
What is the availability of halal mortgages in the US?
In 2001 and 2003, respectively, Freddie Mac and Fannie Mae started buying Islamic mortgage products to provide extra liquidity in the U.S. Islamic finance market. These government-backed housing giants work under the conservatorship of the Federal Housing Finance Agency and are one of the principal means of bolstering homeownership in the United States.
These mortgage buyers have grown to become the main investors in Islamic mortgages. For example, Freddie Mac has invested in Guidance Residential, one of the largest halal mortgage companies in the U.S.
What are the advantages?
These systems ensure that there is mutual risk-taking between the bank and the homebuyer. For example, should the homebuyer be unable to keep up payments, their prior principal payments are protected and not consumed by the interest. Furthermore, if the home loses value, both homebuyer and bank proportionally lose out on the principal value of the home.
They require greater transparency on costs, fees and responsibilities; both parties are required to work together and fulfill their obligations.
This reduces the risk of failures like the subprime lending crisis, when banks overvalued homes and financed mortgages that buyers could not afford, leading to a global recession in 2008.
What are the downsides?
Halal mortgages are more expensive and more difficult to enter into, as they require a down payment of at least 20%. Furthermore, they are not available in every state in the United States.
Additionally, many Muslims are unwilling to deposit their money in banks, if those banks are required to pay interest or earn part of their revenue based upon interest.
Shariq Siddiqui, Assistant Professor & Director of the Muslim Philanthropy Initiative, Indiana University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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Consumer Corner
Reduce Home Fire Risks: 5 Items to Avoid Plugging into Power Strips
Reduce Home Fire: Power strips make it easy to add outlets where families need them, but they aren’t designed to handle every appliance in the home. Plugging certain high-powered appliances into a power strip can overload it, potentially causing overheating and increasing the risk of an electrical fire.
Reduce Home Fire Risks: 5 Items to Avoid Plugging into Power Strips
(Feature Impact) Power strips make it easy to add outlets where families need them, but they aren’t designed to handle every appliance in the home. Plugging certain high-powered appliances into a power strip can overload it, potentially causing overheating and increasing the risk of an electrical fire.
“Power strips are so common that it’s easy to assume anything with a plug can safely go into one, but that’s not the case,” said Bonnie Lee, vice president of property claims at Mercury Insurance. “Appliances that draw significant power can generate more heat than a power strip is designed to handle. A simple change in where you plug something in can help eliminate an unnecessary fire risk.”
The National Fire Protection Association (NFPA) recommends plugging portable space heaters directly into wall outlets and warns that extension cords can be too small for electrical loads such as space heaters and air conditioners. Additionally, the U.S. Consumer Product Safety Commission warns that power strips can pose a fire hazard when overloaded.
Take a closer look at these five household items, as recommended by the home safety experts at Mercury Insurance:
1. Space Heaters
Portable electric space heaters can draw substantial power and should be plugged directly into a wall outlet rather than a power strip or extension cord. The NFPA also recommends keeping space heaters at least 3 feet away from anything that can burn and turning them off when leaving the room or going to bed.
2. Air Fryers
Air fryers pack a powerful heating element. Depending on the model, that can mean a significant electrical load while the appliance is operating. Follow the manufacturer’s instructions and, when directed, plug the appliance directly into an appropriate wall outlet rather than a power strip already serving other kitchen devices.
3. Microwaves
Microwaves require significant power during operation and generally should have a dedicated or properly rated outlet consistent with the manufacturer’s instructions. Avoid treating an available spot on a countertop power strip as an extra kitchen outlet. If there aren’t enough outlets to safely accommodate appliances, consider having a qualified electrician evaluate the setup.
4. Refrigerators and Freezers
Refrigerators and freezers operate around the clock, and their compressors can create additional electrical demand when cycling on. These appliances should be connected according to manufacturer’s instructions and applicable electrical requirements rather than relying on a power strip as a permanent wiring solution.
5. Portable Air Conditioners
Like space heaters, portable air conditioners can place a heavy load on an electrical circuit. NFPA guidance notes extension cords may be too small for loads including air conditioners. Follow the manufacturer’s instructions and use an appropriate wall outlet rather than assuming a power strip can safely handle the appliance.
For information about in-home fire safety, visit MercuryInsurance.com/resources.
Give Your Power Strips a Home Safety Check
The appliances plugged into a power strip aren’t the only things homeowners should consider. The condition and use of the strip itself matter, too.
Homeowners should avoid plugging one power strip into another, commonly known as “daisy chaining,” and should never use a power strip as a substitute for permanent household wiring. Damaged, discolored or unusually warm power strips should be taken out of service. Also check that power strips are appropriate for their intended use and follow all manufacturer’s instructions and electrical ratings.
“If you need power strips throughout a room just to operate everyday appliances, the bigger issue may be that your home electrical system isn’t meeting your needs,” Lee said. “Adding outlets or having an electrician evaluate the circuit may take a little more effort, but it’s a much better solution than creating a potential fire hazard.”
Homeowners should also pay attention to warning signs including frequently tripped circuit breakers, outlets or plugs that feel unusually warm, flickering lights, burning odors, buzzing or crackling sounds and discoloration around outlets. A qualified electrician should evaluate electrical problems rather than relying on additional power strips or extension cords as a workaround.
Photos courtesy of Shutterstock
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Automotive
4 Tips for Efficient EV Charging at Home
Efficient EV Charging at Home: Your car has one job – to take you where you need to go. For electric vehicle (EV) owners, that means keeping it charged so it’s ready to hit the road when you are. Charging your car at home is convenient and cost-effective, especially if you have the right equipment and routines.
4 Tips for Efficient EV Charging at Home
(Feature Impact) Your car has one job – to take you where you need to go. For electric vehicle (EV) owners, that means keeping it charged so it’s ready to hit the road when you are.
Charging your car at home is convenient and cost-effective, especially if you have the right equipment and routines. Consider these quick tips from the EV experts at Schneider Electric.
Watch this video to learn more:
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Install a Level 2 Home Charger
While many EV owners start with standard Level 1 charging using typical 120-volt household outlets, upgrading to a 240-volt Level 2 charger can offer extra efficiency and convenience. With significantly faster charging speeds, these units increase your driving range per charging hour and can replenish your battery in a fraction of the time.
Charge During Off-Peak Hours
If your electric company has variable pricing based on the time of day, you may be able to lower your utility bill by shifting your charging routines. This could mean doing most of your charging overnight and unplugging during peak daytime hours when rates are often more expensive.
Consider a Smart Charger
Since Level 2 chargers can add significant electrical load to your home, many EV owners are concerned they’ll need to make costly electrical upgrades to accommodate the higher power requirements. Instead, consider a smart Level 2 home charger with dynamic power management like the Schneider Charge.
With built-in technology called SmartAmp, this charger intelligently monitors the electrical demand in the home and adjusts the output to your EV accordingly. Whether you’re running a dryer full of laundry or turning on the air conditioning, the system can automatically dial back the charging power to your EV when necessary then ramp it back up when demand drops. This way, you won’t have to worry about overloading your electrical system or being forced to install pricey new panels so you can get everything done.
Since it works with all standard EV charging formats, it’s built to fit your current vehicle and whatever you buy next. Plus, through the connected app, you can conveniently schedule charging with a tap, giving you the ability to manage your EV routine remotely – or just set it and forget it.
Track Your Habits
Understanding your current charging habits can help you fine-tune your routines over time. Smart chargers can make tracking simple and automatic with apps that allow you to access information like how often you’re charging your vehicle, how long it takes and how much energy it consumes.
Learn more about smart EV charging at SE.com.
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Consumer Corner
Getting Your Wood-Burning Fireplace Ready for Winter
As cold temperatures creep in, you might be dreaming about cozy fall and winter evenings in front of a glowing, crackling fireplace. Before you (literally) fire it up for the first time, consider these steps to make sure your wood-burning fireplace is ready to heat your home cleanly, safely and efficiently.
Getting Your Wood-Burning Fireplace Ready for Winter
(Feature Impact) As cold temperatures creep in, you might be dreaming about cozy fall and winter evenings in front of a glowing, crackling fireplace. Before you (literally) fire it up for the first time, consider these steps to make sure your wood-burning fireplace is ready to heat your home cleanly, safely and efficiently.
Clear Out Old Ash and Debris
When you haven’t used your fireplace for a while, it can build up dust, soot and debris. As the first step of your annual checkup, clean out last season’s leftovers but leave about a 1-inch layer of ash at the bottom of the firebox to provide insulation and make it easier to get wood burning.
Schedule Professional Maintenance
Chimney sweeps still exist, although they don’t look like the soot-smudged lads from old movies anymore – and these days they come with a collection of high-powered modern tools to remove buildup from chimneys and flue systems. Experts can also look for ventilation issues, cracks in the masonry and other potential hazards. The National Fire Protection Association recommends getting your chimney inspected once a year and cleaned or maintained as needed.
Consider Efficiency Upgrades
To keep your fireplace working better for longer or improve its energy efficiency, explore your options for upgrades suited to your fireplace type. Glass fireplace doors, new dampers or a high-efficiency fireplace insert can all help reduce energy loss and improve heating performance. Adding or replacing a chimney cap and applying waterproof sealant to the bricks every five years can help protect your chimney from moisture damage over time.
Burn the Right Kind of Wood
Not all wood burns alike, so you can improve the warmth and efficiency of your fires simply by choosing the right kinds of logs. Stock up on seasoned hardwood dried for 6-12 months and store it in a dry, well-ventilated area away from your home so it doesn’t attract pests like mice who may want to take up residence. Avoid burning painted or treated lumber, wet wood or household trash, which can produce excess smoke and harmful pollutants.
Use Safe Fireplace Equipment
Beyond the fireplace itself, check your setup and tools to make sure you have everything you need to safely start and maintain your fires. If you have an open fireplace, make sure to use a sturdy fireplace screen to contain any stray sparks. A good-quality poker, tongs, shovel and brush can also help you control logs and embers, manage ash and keep your fireplace clean throughout the season.
Discover more home maintenance and upgrade ideas at eLivingtoday.com.
Photo courtesy of Unsplash
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