Warren Buffett’s Berkshire Hathaway reveals crucial tip for homebuyers

Buyers may want to avoid a few mistakes when shopping for a home.

Feb 17, 2025 - 12:40

Warren Buffett’s Berkshire Hathaway reveals crucial tip for homebuyers

Several years of heightened mortgage rates and surging home prices have posed a challenge for those trying to close on a house, especially for first-time buyers. Homebuyers now need to budget for much higher costs to purchase a home than they would have needed to just a few years ago.

Mortgage rates have nearly tripled since 2020, and the median U.S. house sale price jumped over $100,000 in the last five years alone.

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These trends have drastically increased mortgage payments on even modestly priced homes, increasing the barrier to entry into the housing market for average Americans.

Berkshire Hathaway Home Services (BHHS) offers helpful advice for buyers hoping to buy a home within their budget in 2025 despite housing market headwinds.

Though prices have increased noticeably for consumers, effective research, financial planning, and level-setting expectations can set buyers up for success when house hunting.

A family sitting on a couch in their new home. Though mortgage rates and home prices have skyrocketed over the past few years, a few practical tips can help first-time buyers enter the housing market.
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Financial preparedness will get you one step ahead in the housing market

One of the most practical and universal pieces of homeownership advice is to ensure you’re in good financial health before starting the home-buying process. Identifying your home budget based on your household income will help you target a realistic down payment—usually between 10% and 20% for first-time buyers.

Ideally, all types of debt should be paid off before house hunting, but having some low-interest debt, like student loans, is fairly common. However, carrying high-interest debt — typically with interest rates over 8% — from credit cards or personal loans can impact your ability to make mortgage payments or get approved for a mortgage loan.

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The BHHS blog advises that getting pre-qualified for a mortgage loan can help ease the pressure of shopping around for the right mortgage.

“Prequalification for a mortgage loan tells you what kind of loan is best, the interest rate you’ll pay, how much you can spend on the purchase price of a home, and whether you’ll pay private mortgage insurance.”

Compromising on certain qualities — such as square footage or buying a fixer-upper instead of a new home — can also help new homebuyers stay within their budgets.

Homeownership comes with hidden costs and fees

Though the down payment and home price get most of the focus when buying a home, appraisal fees, home inspection costs, title insurance, prepaid expenses, lender fees, and real estate attorney fees can quickly add up to thousands of dollars in unforeseen expenses.

Though both sellers and buyers are subject to closing costs, sellers usually deduct the cost from the sale proceeds, while buyers must cover the costs out-of-pocket.

These closing costs can account for up to 6% of your home price. The median home sale price in January 2025 was $419,200, meaning it could cost over $25,000 to close the average home in the U.S.

If you put less than 20% down on the home — as most first-time home buyers do — your lender may require you to pay an extra upfront fee at closing.

The BHHS blog also highlights that buying a home is a long-term investment, stating, “Building equity takes time, so plan to stay in your home long enough to 'repay' your closing costs — it could take five to seven years to sell at a profit or break even.”