Conventional and Islamic finance of home purchase : Islamic home finance at additional cost

Fatawa Question

Asalamu Alaykum Dr Kahf, We have a question for you that we would appreciate your opinion on. My husband and I recently purchased a home in Southern California. We initially were going to go with an Islamic based home financing program in Michigan (through university bank) because they were an Islamic option and had the best rate. Because our real estate agent had contacts with bank of America, we also had gone through the mortgage process with BoA but we had decided to go with university bank because they were Muslim. We paid 5 K into escrow when we signed the contract with the seller thinking that we were set with university. A few days before closing, university bank said they had to charge us an additional 7,000 fee that they forgot to add into the initial estimate. We could not afford this additional cost and so we decided to go with bank of America who honored our low rate with university. Should we have backed out completely from the purchase of this home ? We would have lost 5 K, but financially that would only set us back one month. Our intention in buying this home was because we are living in Southern California for the next 6 years (due to my husband's job) and it is cheaper to buy than rent. We are trying to pay off as much as we can as quickly as possible and when we have money saved up we want to refinance with Ameen housing in the bay area. JAK Salma

Fatwa

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Publication Date

2011-05-27

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Housing
• Financing
• Purchasing
• Administrative fees
• Real property
• Commercial finance companies
• Subprime mortgage
• Commissions

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-734911

• APA
• MLA
• AMA