Warren Buffett, one of the world’s richest individuals, holds approximately $130 billion in assets. Remarkably, he has lived in a modest house in Omaha for nearly 70 years. Purchased for just $31,500 in 1958, the house is now valued at around $1.4 million. Buffett’s philosophy on home ownership and his advice continue to inspire many today. Here are 8 pieces of advice he offers about buying a house.
1. The Attachment to a Home is Strong
Warren Buffett purchased his current house in 1958. Even 62 years later, he still resides in the same home. He has a deep attachment to his house, which he considers the best he has ever purchased. At the 2021 Berkshire shareholders meeting, he jokingly referred to it as “Buffett’s folly,” highlighting his deep affection for his home in jest.
2. Choose a Home You Can Afford
Early in his marriage, Buffett and his wife started with $10,000. He gave her two options: spend all the money on buying a house, or invest the money and buy a bigger house later. His wife chose the latter, and they waited several years before purchasing a home. This underscores the importance of choosing a home you can afford.
3. A Home Provides Precious Memories
Buffett has said that buying a home was the third-best investment he ever made. He reflected on this investment, stating:
With the $31,500 we paid for our home, my family and I have made wonderful memories for 52 years and look forward to making more.
This emphasizes that a home is not just a physical object but a place that provides precious memories.
4. Now is a Good Time to Buy a House
Buffett advises taking out a 30-year mortgage to buy a house when interest rates are low to avoid big mistakes.
It’s an incredible opportunity. Such a chance may not come again in five years.
This implies that now is an optimal time to buy a house.
5. Buy a House if You Plan to Stay Long-Term
Buffett says that buying a house is a great decision if you plan to stay in a particular area for a significant period or are very likely to do so.
If you plan to stay in a particular area for a long time, buying a house is a fantastic decision.
This highlights that buying a house is a wise choice if you plan to live there long-term.
6. Do Not Buy a House in Uncertain Situations
Buffett advises against buying a house if you are extremely unsure about your job or plan to move within six months.
A house is a great asset, but I wouldn’t buy one if I planned to move within six months.
This means it is not wise to buy a house in uncertain situations.
7. Choose a Home You Can Afford
Buffett warns that a house can become a nightmare.
If the buyer’s expectations exceed their wallet and the loan agency, backed by government guarantees, fuels those fantasies, a house can become a nightmare.
This stresses the importance of choosing a home you can afford.
8. The Advantage of a 30-Year Mortgage
Buffett calls a 30-year mortgage “the world’s best financial product.”
If interest rates drop to 2%, you can refinance at the lower rate.
This underscores the benefits of a 30-year mortgage, providing favorable long-term conditions.
Conclusion
Buying a house is one of the most important decisions in life. Use Warren Buffett’s advice to make a wise choice. A home offers more than just investment value; it can provide significant personal value. Make the best decision for your circumstances.
Source: Business Insider, “Warren Buffett paid just $31,500 for his home of nearly 70 years. Read his 8 best quotes about buying a house.”