Interest & Mortgage by Mufti Akmal Sahib

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Analysis of hidden interest in some of the so called halal mortgages designed to deceive muslims.

the interest rate for subsidized stafford loans are 5.6% and I’m sure the interest rate to my credit cards are 20 to 30%. I owe about 10,000 dollars.

Ok, so I bought a house on January 2 for $519,000. I put a down payment of $25,950 (5%), so I took out two loans: a fixed rate, 30 year loan for $93,050 and an interest only loan for the remaining $400,000, at 6% interest. My payments on the I.O. are $2,000 per month (6% of 400k). The interest only portion of the loan is for 10 years. My question is, what exactly happens after that? I obviously know my payments will increase since the $400,000 will have to be re-amortized over a 20 year period instead of 30 (assuming I don’t put anything towards principal in the 10 years), but what exactly happens to the interest payments? Assuming a continuing 6% interest rate, do they remain at $2,000 per month for the entire 30 years? Ugh, that’s $720,000, just in interest… Perhaps the answer is obvious, but I’m asking because I’ve heard that on a fixed rate, your interest part of the payment is high at the beginning, but gradually goes down. Why?

I’d like to know how to actually do the math

I have great credit and have been approved for a 0% interest for a year Credit Card, but I took out a loan last year before I knew anything about credit and now the interest rate is killing me.