Updated: Jul 30
In fact, the roots of Jewish lending are to be found in tzedakah, in charitable works. Loans were to be given as a form of charity, not for gain. Jews were specifically prohibited from lending to other Jews “on interest.” The poor were not to be condemned for an inability to repay a loan. Loans could consist not only of money but also of goods and utensils. There were ethical considerations underlying those strictures. Such a loan was considered a form of tzedakah, indeed, one of the highest forms because, as Maimonides points out in his Mishneh Torah, “a person who assists the poor man by providing him with…a loan [is] placing him in a situation where he can dispense with other people’s aid.” All Jews are obligated to give such free loans, regardless of gender or class. Even those whose livelihood comes from lending are obliged to make free loans to the poor.
MORTGAGE CONDITIONS & FORECLOSURE POLICY
Conditions are important in the concept of faith based mortgage which will classify the Mortgage to be faith based or not. In the conventional bank, if foreclosure happens then house is taken away by bank, and the payment you paid is gone. Since, mutual mortgage is very customized, it is important to ask following questions
What are the mortgage conditions?
Would be same as a conventional mortgage?
What is the policy of mutual mortgage for foreclosure in an unfortunate events?
If person loses his or her job and there is no way to pay the mortgage then ask Mortgage provider to address questions such as, If I loses job and want to get rid of House and mortgage, What is the policy?
It matters to know about what the net amount will be coming out from pocket. If the total mortgage amount is $610K then the interest I would be paying $400K approximately with the conventional bank then
How much total mortgage amount including fees and interests?
What will be the interest rate?
INTEREST SAVINGS VS RENTAL SAVINGS
The most conventional bank has the allowance for making accelerated bi-weekly and additional yearly payments which can save 5-55% interest. So for the mortgage amount of 610K, the potential interest savings is $280K approximately at 3.69% interest rate. About this,
What is the policy for making accelerating and additional payment together?
If there is rental monthly payment as a part of mortgage agreement then what is the policy for making accelerating and additional payment on the top of rental payment?
How much minimum down payment or deposit is required?
How much maximum of additional payment allowed per year?
HISTORY AND REFERENCES
The Faith based mortgage concept is new, and recently, there are many institutions came into the market. Ask following questions
How long have you been established?
How many mortgage owners as of today do you have with mortgage plan?
Can I get references from your customers?
BEFORE MAKING DECISION
Bottom lines are for the person who is making decision should consider few precautionary measures. If I am buying something then it is my due diligence that I make the informed and subjective decision based. Review personal necessity vs nice to have it, Reviewing market conditions, Reviewing personal job situation and household income, Reviewing household people and buy what is really need. If my family can stay in small property then I do not need to buy big one, Review and assess, renting vs owning and many more things…
Disclaimer: This information intended for reference only. Please contact respective mortgage operator for more detailed information.