OT: The Avalounge: It's My Thread You Just Post In It

[ASmileyFace]

Drunk me does not have good judgment.

 

[ABasin]

As far as banks go, I have all my money in a bank. I've got a chequing and a savings account (insert Kevin Hart joke), but when I opened it I specifically asked the bank to remove all interest accrued from my savings account. So I don't generate any interest whatsoever with any of my accounts.

Another thing I didn't know. I know you really can't dictate mortgage rates with banks, but I guess that's only upwards. You can negotiate them down then?

It explains the 'where do you put cash' thing. I was wondering if we should suggest a group party at Dahrougem's house, and someone check between the matresses.

On the mortgage front, I'm wondering if the "no interest" mortgage is set up the same as US mortgages: when you make the payments, the interest gets paid first, then the principal comes in along the way. I've always hated that, honestly. And what happens if you sell your house partway into the loan?

So, going back to your example of a $300K house that a bank is offering a loan to you at $500K, when you make those $1,389 monthly payments (assuming equal monthly payments over a 30 year no interest loan), 100% of that must go into the value of the home, correct? In other words, is there any notion of the $300K you feel the house is worth, and that $200K of difference the bank is asking for in profit? Does the $200K get paid first, then the $300K? Or would that concept be equal to interest in the eyes of Islam?

Finally, what happens if you pay off $100K of the $500K loan, then you want to sell? Who decides on the price of the home for sale? Does it then work like a 'normal' (if I may call it that) interest-mortgage-based home sale? If you get a buyer to buy it for $600K (and leaving out for a moment realtor sales commissions - no offense, Skywalker - and taxes owed), does your bank take it's remaining $400K on your loan, and you walk away with your $100K that you had already paid on the loan + $100K in profit of the home?

 

[Bubba Thudd]

Another thing I didn't know. I know you really can't dictate mortgage rates with banks, but I guess that's only upwards. You can negotiate them down then?

It explains the 'where do you put cash' thing. I was wondering if we should suggest a group party at Dahrougem's house, and someone check between the matresses.

On the mortgage front, I'm wondering if the "no interest" mortgage is set up the same as US mortgages: when you make the payments, the interest gets paid first, then the principal comes in along the way. I've always hated that, honestly. And what happens if you sell your house partway into the loan?

So, going back to your example of a $300K house that a bank is offering a loan to you at $500K, when you make those $1,389 monthly payments (assuming equal monthly payments over a 30 year no interest loan), 100% of that must go into the value of the home, correct? In other words, is there any notion of the $300K you feel the house is worth, and that $200K of difference the bank is asking for in profit? Does the $200K get paid first, then the $300K? Or would that concept be equal to interest in the eyes of Islam?

Finally, what happens if you pay off $100K of the $500K loan, then you want to sell? Who decides on the price of the home for sale? Does it then work like a 'normal' (if I may call it that) interest-mortgage-based home sale? If you get a buyer to buy it for $600K (and leaving out for a moment realtor sales commissions - no offense, Skywalker - and taxes owed), does your bank take it's remaining $400K on your loan, and you walk away with your $100K that you had already paid on the loan + $100K in profit of the home?

No telling what we'd find...

 

[dahrougem2]

Another thing I didn't know. I know you really can't dictate mortgage rates with banks, but I guess that's only upwards. You can negotiate them down then?

It explains the 'where do you put cash' thing. I was wondering if we should suggest a group party at Dahrougem's house, and someone check between the matresses.

On the mortgage front, I'm wondering if the "no interest" mortgage is set up the same as US mortgages: when you make the payments, the interest gets paid first, then the principal comes in along the way. I've always hated that, honestly. And what happens if you sell your house partway into the loan?

So, going back to your example of a $300K house that a bank is offering a loan to you at $500K, when you make those $1,389 monthly payments (assuming equal monthly payments over a 30 year no interest loan), 100% of that must go into the value of the home, correct? In other words, is there any notion of the $300K you feel the house is worth, and that $200K of difference the bank is asking for in profit? Does the $200K get paid first, then the $300K? Or would that concept be equal to interest in the eyes of Islam?

Finally, what happens if you pay off $100K of the $500K loan, then you want to sell? Who decides on the price of the home for sale? Does it then work like a 'normal' (if I may call it that) interest-mortgage-based home sale? If you get a buyer to buy it for $600K (and leaving out for a moment realtor sales commissions - no offense, Skywalker - and taxes owed), does your bank take it's remaining $400K on your loan, and you walk away with your $100K that you had already paid on the loan + $100K in profit of the home?

Well, given that I have no experience with an interest-free mortgage, I can't provide any real-world examples as to payments. However, the theory of it is that the bank does have rights that it would need to protect. So, making the house collateral until monthly instalments are paid off in full is necessary.

If the house is purchased by the bank for $300k, and then sold to me for $500k, there is no separation of funds. The bank gets the $500k as one, it isn't separated into $300k for the house and $200k for the extra loan or something along those lines. That's where in Islam the line is drawn. The contract must be set up where the seller is getting a set amount of money back without any stipulations, and the purchaser understands what they are paying back without any stipulations (late penalties, interest charges, etc).

As far as selling goes: If a house was to be sold, the bank would be paid back everything it is owed. If an individual purchases a house for $500k from a bank, pays $100k so as to still owe $400k, and sells the house for, let's say, $300k (because, really, the house originally WAS valued at $300k), that would mean the bank is still owed $100k, and the individual who originally purchased the house from the bank and is now selling is still responsible to pay off that $100k, because they agreed to that contract. That is how banks are protected and are still able to profit. If the original purchaser manages to actually make money by, say, selling the house for $500k, then they would pay the bank the $400k that is still owed and then they are allowed to keep the $100k for themselves. Because, by paying the $400k to the bank, the "rights" are 100% transferred from bank to purchaser, and thus the purchaser is now allowed to profit.

Hope I explained that ok lol.

 

[tigervixxxen]

Drunk me does not have good judgment.

#girlfriend

 

[ABasin]

Well, given that I have no experience with an interest-free mortgage, I can't provide any real-world examples as to payments. However, the theory of it is that the bank does have rights that it would need to protect. So, making the house collateral until monthly instalments are paid off in full is necessary.

If the house is purchased by the bank for $300k, and then sold to me for $500k, there is no separation of funds. The bank gets the $500k as one, it isn't separated into $300k for the house and $200k for the extra loan or something along those lines. That's where in Islam the line is drawn. The contract must be set up where the seller is getting a set amount of money back without any stipulations, and the purchaser understands what they are paying back without any stipulations (late penalties, interest charges, etc).

As far as selling goes: If a house was to be sold, the bank would be paid back everything it is owed. If an individual purchases a house for $500k from a bank, pays $100k so as to still owe $400k, and sells the house for, let's say, $300k (because, really, the house originally WAS valued at $300k), that would mean the bank is still owed $100k, and the individual who originally purchased the house from the bank and is now selling is still responsible to pay off that $100k, because they agreed to that contract. That is how banks are protected and are still able to profit. If the original purchaser manages to actually make money by, say, selling the house for $500k, then they would pay the bank the $400k that is still owed and then they are allowed to keep the $100k for themselves. Because, by paying the $400k to the bank, the "rights" are 100% transferred from bank to purchaser, and thus the purchaser is now allowed to profit.

Hope I explained that ok lol.

The more you explain, the more questions I have. I do appreciate it though.

So, you brought up late penalties - and the way you worded it makes me believe that those are frowned upon also. Do I have that correct?

If I have that correct: if you have that $500K loan, and miss payments, what is the bank's recourse? Typically, they hit you with some late payments for awhile, then go through a default process. What happens here?

Actually, what happens with the default process if you completely stop paying the loan? Does the bank simply take possession of the home, eat its losses, and everyone goes on their way?

 

[dahrougem2]

The more you explain, the more questions I have. I do appreciate it though.

So, you brought up late penalties - and the way you worded it makes me believe that those are frowned upon also. Do I have that correct?

If I have that correct: if you have that $500K loan, and miss payments, what is the bank's recourse? Typically, they hit you with some late payments for awhile, then go through a default process. What happens here?

Actually, what happens with the default process if you completely stop paying the loan? Does the bank simply take possession of the home, eat its losses, and everyone goes on their way?

For the bolded, I do not have the answer and I wouldn't want to speculate on an answer which may be incorrect. I will say, however, that it's a very strict process when it comes to these types of mortgages. At least upon doing research on them. I know a lot of people who have been handed mortgages who don't have stable income, simply because mortgage sellers are looking to make money for themselves and their bank/looking to meet targets. With these types of mortgages, you must first submit an application to be considered for approval, and then maintain "membership" with the organization/bank providing the mortgage for a set amount of time, and if it's deemed that an individual has a steady income and is able to make payments, they will then be approved.

Islam definitely frowns upon late penalties, because they are thought of in the same light as interest.

The bank's recourse, I guess, is that they have the rights to the home until it is 100% transferred to the home purchaser.

 

[Foppberg]

10 degrees (50 degrees Fahrenheit) during February in Canada.. I just want to skate damn it. Damn Global warming.

 

[RockLobster]

Drunk me does not have good judgment.

Did you get "Black Out Drunk"?

 

[ASmileyFace]

No blackout but I just stayed out waaaaaay too late last night. Ended up going back to some random persons house with a bunch of people and drinking more after bar close. I really should have just gone home with my friend but I was in a partying mood.

Went skiing today with a cool girl who I met through my ex many months ago. Unprovoked she sent me her number and said that we should go skiing together. She's really cool and a good skier. Very glad she hit me up. I think we'll be skiing together a lot in the future.

 

[Bonzai12]

I think we'll be skiing together a lot in the future.

 

[UncleRisto]

I think we'll be skiing together a lot in the future.

 

[ASmileyFace]

Stupid Sexy Flanders