Renting Or Owning: Here are Some Benefits To Owning
Sure, the market rates are low and there’s always Islamic finance institutions like us here at ijaracdc.com to make sure that you get into the house of your dreams with a deal that won’t have you bound by Riba, but there are other questions you need to look at beyond Sharia compliance.
You need to have some kind of checklist that will tell you how much you can afford to spend. Not only will the most trustworthy Islamic loan institutions want to see you live within your means, but they’ll also want to make sure that you’re able to calculate the numbers you need effectively.
It’s easy. Just take the total of all your monthly payments including credit cards as well as the mortgage and then see what percentage of the total income that equals for your household. After you’ve worked through those numbers, you’ll have a figure that you can work with inside the scope of Islamic finance. The number you get at the end is called the debt to income ratio.
Still, you might need to be further persuaded to buy rather than just rent. Maybe all the responsibilities that come with buying a home are leaving you a little undecided. If that’s the case, here are some great reasons to take the plunge and look into getting an Islamic loan to get you started.
First off, the economy itself should be telling you that this is a great time to look into the housing market if you haven’t already taken the plunge. With all the turmoil that’s been going on in the world credit and housing markets, real estate is cheaper than it’s been in years and interest rates are at historical lows. Overall, if you can afford it, this is a great time to work with Islamic finance partners to get you started in home ownership.
Remember too that when you buy a home, you are investing in your financial future and starting on a path whereby your family will be able to enjoy the property as an inheritance down the road. As a renter, you can always be the target of rent increases, but once you pay your home off; there are only utilities and maintenance to keep pace with.
Alterations in a property that’s been bought with an Islamic loan are part of the process. When you own the home, you can do with it as you like. On the other hand, when you rent, changes to the property are the domain of the owner or landlord.
- Tax Breaks… The US Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home. With an IjaraTM transaction, you may deduct the profit paid along with the property taxes.
- Gains… Between 1998 and 2002, national home prices increased at an average of 5.4% annually. While there’s no guarantee of appreciation, a 2001 study by the National Association of Realtors found that a typical homeowner has approximately $50,000 of unrealized gain in a home.
- Equity… Money paid for rent is money that you’ll never see again, but Ijara™ rent to own payments let you build equity ownership in your home without Riba.
- Savings… Building equity in your home is a ready-made savings plan. And when you sell, you a generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
- Predictability… Unlike rent, your Ijara™ payments don’t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.
- Freedom… The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.
- Stability… Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.
Homeowners refinance for different reasons, but the process of refinancing a mortgage should result in some benefit to the homeowner. A borrower may choose to refinance to obtain a lower rate and a lower monthly payment or change the type of loan that they have. Borrowers who started with a high-interest loan can often reap the rewards of an improved credit standing by refinancing. Some homeowners refinance to “cash out” and take advantage of the equity they have earned, while others may choose to refinance to shorten their loan term and build equity more quickly.
Find out if now is the right time to refinance by calling our office! You may be able to lower your monthly payments or reduce the time it takes to pay off your loan. You may also be able to save even more if you use your refinance proceeds to pay off credit card or other installment debt, since mortgage interest is usually 100% tax-deductible, and interest on consumer debt is not.
The IjaraCDC Advantage
- Our Investors offer competitive rates and fees
- Easy online application
- Guidance and advice from an experienced loan professionals
- No run around and straight answers
- Contact our office and talk to one of our professional advisers for more information and get the best rate available for an Islamic structured transaction!