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).

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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.

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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

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This article is republished from The Conversation under a Creative Commons license. Read the original article.

Welcome to the Consumer Corner section of STM Daily News, your ultimate destination for savvy shopping and informed decision-making! Dive into a treasure trove of insights and reviews covering everything from the hottest toys that spark joy in your little ones to the latest electronic gadgets that simplify your life. Explore our comprehensive guides on stylish home furnishings, discover smart tips for buying a home or enhancing your living space with creative improvement ideas, and get the lowdown on the best cars through our detailed auto reviews. Whether you’re making a major purchase or simply seeking inspiration, the Consumer Corner is here to empower you every step of the way—unlock the keys to becoming a smarter consumer today!

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(Family Features) Making money from everyday items in your home may be easier than you think. With a growing number of companies simplifying the process, turning unused items into cash has never been simpler.

Making Cash

These companies are part of the circular economy, where you get to make money from your items and feel good about it at the same time. By reselling items you don’t use, you can give these items a second home or repurpose them into something that has practical applications.

For example, unused gold and precious metal jewelry can be given a second home to or repurposed for vital technology sectors like health care. This reduces the need for environmentally taxing mining operations and gives these valuable resources a second purpose.

Whether it’s clothing, jewelry or tech, consider these simple ways to make extra cash by selling items online.

Sell Used Clothing

Some newer platforms offer a less hands-on approach to selling used clothing online. Unlike popular online platforms that require you to take pictures or create listings for your items, look for outlets that allow you to simply package your items and send them out with an insured label. This makes selling clothing online a breeze and reduces the potential headaches of dealing with buyers directly and managing listings.

Sell Unworn Jewelry
For precious metals like gold jewelry or silver jewelry, selling directly to a trusted buyer can provide a fast, secure way to unlock their value. Consider TheAlloyMarket.com, a company featured in trusted outlets like Forbes, NBC and US News & World Report that offers a streamlined process with free, insured shipping and no hidden fees or commissions. Unlike platforms that require complex listings or charge extra fees, you keep 100% of the quoted price. On average, customers earn $1,700 or more for gold jewelry and other precious metal items, offering a straightforward, easy and rewarding way to sell unused valuables.

Sell Designer Bags
If you have any designer bags at home, look for platforms that let you sell handbags directly to them and provide upfront estimates before you ship your items. Some platforms provide free insured shipping and marketplaces where you can buy designer handbags at discounted prices.

Sell Books You’ve Already Read
While this likely won’t make you a fortune, selling used books is a simple way to make some extra cash and help preserve the environment. College students in particular can benefit from upfront estimates and free shipping or the ability to trade in used books for ones they’ll need next semester. Plus, some platforms also offer books for purchase at heavily discounted prices.

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Sell Tech After Upgrading
If you upgraded phones recently or have a used phone just collecting dust, get an upfront estimate for your phone from a trusted site. Some buyers provide free shipping and, with upfront estimates, you know exactly what you will get for your used phone before sending it in.

Sell Old Furniture
Turn your unused furniture into cash by listing items like sofas, tables or chairs on local marketplaces or apps. Clear photos and detailed descriptions can help attract buyers nearby, saving you the hassle of shipping. Selling old furniture not only earns extra money but also helps reduce waste by giving items a second life.

To learn more about how you can get a free, no-obligation estimate for gold jewelry or other precious metal items, visit TheAlloyMarket.com.

SOURCE:
Alloy Market

STM Daily News is a vibrant news blog dedicated to sharing the brighter side of human experiences. Emphasizing positive, uplifting stories, the site focuses on delivering inspiring, informative, and well-researched content. With a commitment to accurate, fair, and responsible journalism, STM Daily News aims to foster a community of readers passionate about positive change and engaged in meaningful conversations. Join the movement and explore stories that celebrate the positive impacts shaping our world.

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(Family Features) Saving money is a critical financial practice that nearly everyone strives to accomplish. Yet, it is often easier in theory than reality. If you are anxious or concerned about your financial situation and your ability to save, know you’re not alone.

More than one-third (36%) of the general U.S. population feels anxious about their current financial situation. Further, many households across the country do not feel in control of their finances, with 11% reporting they’ve “forfeited contributions to their retirement accounts,” potentially impacting themselves later in life. These figures from the World Financial Group paint a concerning picture of how people across the country feel about their current and future finances.

Consider these savings tips.

Create a Budget
Every budget begins with your net income. Ensure you subtract deductions like taxes, workplace benefits, insurance or retirement plan contributions. This way, you know exactly how much money is available each month. Next, calculate all fixed expenses, including regular monthly payments or bills. These include utilities, cellphone bills, rent or mortgage, vehicle payments and anything that remains static month-to-month. Subtract those fixed expenses from your net income to create your monthly budget.

Track Your Expenses
Once your budget is in place, it’s much easier to keep track of expenses that vary month-to-month, like gas, groceries and entertainment costs such as dining out, seeing a movie or going to a sporting event. Tracking minor expenses may seem tedious initially, but logging each purchase can help set a foundation for financial accountability.

Set Savings Goals
Tracking your expenses for a few months should give you a good idea of how realistic it is to save a set amount of money each month. Before you set a goal, or if you’re struggling to consistently reach savings goals, take a financial literacy quiz to test your knowledge and then consider meeting with a financial services expert.

Pay Down Debts
Debt is one of the largest barricades people face when trying to save more money. If you feel debts are stopping you from reaching your financial goals, know it is possible to pay off debt while saving at the same time. Make sure to prioritize debts with higher interest rates that lead to compounding costs in the future and then, if possible, make more than the minimum payment to pay them off faster. It may limit you in the short-term but can equate to more financial freedom – and the ability to save more – in the future.

Find more expert savings advice and test your financial literacy by visiting WorldFinancialGroup.com.

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SOURCE:
World Financial Group

Our Lifestyle section on STM Daily News is a hub of inspiration and practical information, offering a range of articles that touch on various aspects of daily life. From tips on family finances to guides for maintaining health and wellness, we strive to empower our readers with knowledge and resources to enhance their lifestyles. Whether you’re seeking outdoor activity ideas, fashion trends, or travel recommendations, our lifestyle section has got you covered. Visit us today at https://stmdailynews.com/category/lifestyle/ and embark on a journey of discovery and self-improvement.