Quote:Really it's a worse deal because making extra payments or early payments eats away interest. They won't have that tool.

 

Very good point, but let me add a couple of other thoughts regarding this.

 

1.  How does a financial institution determine creditworthiness when considering someone for a loan?  In the case of a mortgage, income, debt and credit history is scrutinized.  How does someone build a credit history if they don't pay interest?

 

2.  Assume hypothetically that the current interest rate for a home loan is 8% for someone with "good" credit.  Say after 5 years the current interest rate drops to 4%.  A traditional borrower could refinance at the lower rate.  How would a "sharia complaint" refinancing be calculated?

 

The other thing(s) to consider are in the opening few paragraphs of the article that the OP linked to.  From the article.

 

Quote: 

"We will work to develop new tools for Muslims who are prevented from using conventional mortgage products due to their religious beliefs," Seattle Mayor Ed Murray said during a press conference July 13

 

Is this not government meddling in religion or pushing private business into serving said religion by offering different rules?  What's next?  Perhaps grocery stores should be "sharia complainant" and not offer the sale of bacon or ham because it "offends" those that supposedly practice sharia law.

 

Look at it this way.  Hard core Mormon groups are against alcohol or tobacco use.  Should the government be pushing for the ban of the sale of such products in those communities based solely on their religious beliefs?  Should there be a push for "Mormon complainant" convenience stores in certain areas?

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