Why Refinance Your Home with Islamic Home Financing
There was a time when faith conscious Muslim American families did not have a sound alternative to a conventional home mortgage that was compliant with both U.S. and Islamic legal systems. As a result, many Muslim families may have found themselves in a conventional loan contract that includes the prohibited practice of riba. Now, with Guidance Residential, it’s easy to switch to an authentic, halal alternative.
Guidance Residential has been offering an authentic Shariah-compliant mortgage alternative since 2002. The company’s Declining Balance Co-ownership Program ushered in a new era in home buying and refinancing for Muslim Americans, as well as non-Muslims who are drawn to the more equitable arrangement. This alternative to a conventional mortgage is free of Riba, or interest while being competitively priced as well.
Why Refinance Your Home?
A homeowner may choose to refinance their home for several reasons…
Lower Your Monthly Payment
Mortgage refinancing may allow a homeowner to take advantage of cost savings options if the first mortgage term was not preferred or if the rates were too high due to market conditions. Refinancing may help a homeowner decrease their monthly payment by switching to a lower rate when market conditions are favorable.
Shorten Your Term
Refinancing can allow a homeowner to shorten their contract term.
Generally, rates are higher on a 15-year contract than a 30-year one, all else being equal; this means higher monthly payments, so many home buyers initially choose a 30-year contract when purchasing their home. But when rates drop, the homeowner may find that a shorter contract is now affordable.
Refinancing to a shorter contract can lead to big savings in the long run, because the homeowner will pay less in interest or — in the case of Islamic home financing — profit payments. In addition, the homeowner will enjoy all of the benefits of a fully paid-off home years earlier.
Align With Your Faith
For customers concerned with upholding the principles of their Islamic faith, switching to an Islamic mortgage with a Sharia-compliant financier such as Guidance Residential can be a smart move.
The Difference Between Conventional Mortgage and Islamic Mortgage
The primary difference between an Islamic mortgage alternative offered through Guidance Residential and a conventional mortgage is the foundation of the contract. Islamic home financing is a partnership rather than a loan, so there is no debtor or creditor.
According to Islamic legal jurisprudence, lending money to profit from any commercial or investment activity including the financing of real estate is not an acceptable method of commerce. The home financing program that Guidance Residential created is based on an Islamic financial concept known as “Musharakah Mutanaqisa” or “Diminishing Partnership.” In this model, Guidance Residential and the homeowner purchase the home together as partners. Learn more about the differences between an Islamic mortgage and a conventional mortgage.
Refinancing: How to Change Your Conventional Mortgage to an Islamic Mortgage
The first step for a homeowner interested in refinancing is to fill out an application providing Guidance Residential with basic information so that they can find out how much funding they may qualify for.
They can start with a quick Pre-Qualification if they would like to obtain a rough estimate of financing that may be available. But they can also choose to skip that optional step and move directly to a Pre-Approval Application. During the application process, the refinance customer will be required to provide financial documentation to verify the information.
Generally, refinancing an existing property is a more streamlined, faster, and less complicated process than financing a new property. First, the property is already chosen and there is no home search to contend with. Also, the title work needed usually takes 24-48 hours versus a much longer wait time for original title work when purchasing a new home. The appraisal process is also streamlined as scheduling an appraisal is quicker since the appraiser deals with the homeowner directly rather than a realtor. Overall, the timeline from the start of the refinance process to completion is much shorter. With the online tools that Guidance provides and their professional and knowledgeable staff, refinancing can be a smooth process.
Since 2002 Guidance Residential has helped over 30,000 families. We are so thankful to be part of their celebrations. Start your home buying journey today.
- See if you Pre-Qualify in less than 10 minutes.
- Ready to start your home search? Get Pre-Approved today.
- Guidance Residential currently has not one but TWO refinance specials to choose from
- Receive a $500 credit at closing for refinances with 20- or 30-year contracts*(Choose this option to lower your monthly payments.)
- $1,195 credit if you refinance to a 15-year contract!**
(Choose this option to own your home in full sooner and save even more!)
*$500 credit at closing for 15-year, 30-year, 20-year and Jumbo contracts. Both existing Guidance Residential customers and new to Guidance customers are eligible for this offer. Promotion cannot be combined with any other offer, discount, pricing exception or Special Program. Applications must be submitted between April 1, 2021, and June 30, 2021. Excludes customers currently with an active application, customers that are not current, or customers who have financed with Guidance within the last 120 days. Contracts must close by September 30, 2021. Only available on approved contracts. Other restrictions may apply. Refinance option may not be available for some Texas contracts. Contact us for additional information.
**$1,195 is credited to all 15 Year Refinance contracts. Special available only for owner occupied refinances. Both existing Guidance Residential customers and new to Guidance customers are eligible for this offer. Promotion cannot be combined with any other offer, discount, pricing exception or Special Program. Applications must be submitted between May 17, 2021 and July 31, 2021. Excludes customers currently with an active application, customers that are not current, or customers who have financed with Guidance within the last 180 days. Contracts must close by September 30, 2021. Only available on approved contracts. Other restrictions may apply. Refinance option may not be available for some Texas contracts. Contact us for additional information.