Why is a typical mortgage 30 years? Residential housing has been subsidized for 100 years. It’s the reason people usually have to get a mortgage in order to buy a house. It’s been subsidized mostly with debt. If you ask most people in Europe and Asia, they own their homes without a mortgage. The thinking in most European and Asian cultures is that taking on long term debt to buy a house is perverse, or just plain stupid. I’ll tell you why a typical mortgage in the western world is 30 years, and it’s for one reason only, so that the banking system can use the 30 year obligations as assets and acquire pension funds, insurance cash flows and other liquidity. If we stop subsidizing residential housing, the prices will fall to a level that actually serves the people using the homes instead of enslaving them to the corporations that do not use the homes. This has to be a cultural change, just like our culture of saving and building or buying homes with cash and short term debt was changed to long term debt and zero cash deals. Wouldn’t a 7 year mortgage serve people better? I’m only asking this rhetorically because I want to get you thinking that it’s possible and even necessary. But for the purposes of this article, let’s just discuss how we can buy a house with bad credit. Let’s start with a premise that many people haven’t heard or don’t believe. It’s easier to buy a house with bad credit than get a two-year mobile phone contract or unsecured credit card. And one more, your first choice for lenders should be the seller. This is not necessarily true in a “fast market”, such as where homes are selling within 7 days, or even 90 days; however, the deals are still there. It’s just easier to buy a home where the market is slow… slower or slowish. You can easily determine how fast houses in your market are selling by asking a real estate agent or checking some of the real estate databases online, or just looking around the neighborhood. Lease with an Option to Purchase The most popular method of buying a house without traditional bank financing is the “lease/option”. My wife first objected to leasing because of the lost opportunity to accrue money in equity, but a lease contract can be written to preserve equity. For example, your lease can include an option to purchase the property. You can either pay for the option, or try to get the owner to give you an option to purchase at some point in the future, that depends on the market and sophistication of the owner/seller. The options contract appended to the lease agreement can include a provision stating that lease payments must be credited to the purchase price if you exercise the option to buy. The option can be exercised when certain criteria are met, such as by a certain date, or when the fair market price of the property reaches a certain level. The option state that the price is fixed or that the exercise of the option is based upon the fair market price at the time the option is exercised. You can make your lease/option agreement into a real owner financing deal by adding a provision in the option to purchase that the lessee has the “first right of refusal”. This means that if the owner wants to sell to someone else during the term of your lease/option, the offer must be made to you first and you have to be given the option of accepted or rejecting it before the owner. If you reject it, then the owner can consider the offer to sell. If you exercise the option to buy, the seller can hold the note, and in some cases, the deal might involve you finding a buyer for the note. This is typically what happens when you exercise a lease/option contract, but it’s not necessary. If you make a deal with the seller to finance the sale of his home, he will carry the note or allow you to make payments under the