I have a question regarding refinancing my home. I bought my home from a builder then as expected they sold the loan to another loan company after few months. Now with the interest rate is lower than before, is it permissible to do refinancing from same lender I am with or another lender to reduce my payment?

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May Allah reward you for your keenness to finance your home purchase in accordance with the Islamic rules. The refinancing will involve a new contract and thus will be subject to a new Islamic ruling.

Various fiqh councils and scholars have ruled that the sale of the loan to another entity is not in the responsibility of you as the buyer, since it is out of your control and limited by various US realities on liquidity and regulations – however, the Muslim buyer should make efforts to make the original purchase/refinance contract as close to Islamic norms as possible. The original purchase you made is subject to the second paragraph of #1 below; and a more general treatment is in #2.

And Allah knows best.
The matter of purchasing a home financed by the owner, whether builder, bank, or individual, is Islamically reviewed in the foreclosure fatwa of the AMJA fiqh council here: http://www.amjaonline.org/en/component/easyblog/entry/about-buying-foreclosure-homes-directly-from-the-bank?Itemid=327

While there is a difference of opinion, some of the scholars permitted the transaction as long as the two departments – the one contracting the building of the home or its sale as present owner, and the one conducting the loan – belong to the same entity. This is assuming that the financing organization is the actual owner of the property, not just a lienholder.

(2) The same council has reviewed and recommended companies (included Guidance Residential, Ameen Housing, and others. You may review their article here: http://www.amjaonline.org/en/articles/entry/amja-resident-fatwa-committee-resolution-about-islamic-home-financing-companies-in-the-us

And Allah knows best.


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