Warren Buffett Recommends Homeownership. How to Pull It Off in 2022

The investment giant says owning a home is a smart financial move.

There are different schools of thought when it comes to homeownership. Some people think a home is a pure expense, and one that comes with risks. But others insist a home is a solid investment. Warren Buffett falls into the latter camp.

As one of the most successful investors of all time, Buffett insists that if you plan to stay in the same area for a long time, it pays to own a home. Not only can a home offer stability, but its value can increase over time.

Buffett has also called the 30-year mortgage "the best instrument in the world." That's because a 30-year mortgage gives you options. You can pay off your home over time and carry a mortgage to avoid tying up too much cash in your home. And if mortgage rates fall after you lock in your loan, you can always refinance.

But owning a home is easier said than done, especially in today's tough housing market. If you're serious about buying a home in 2022, here are some key moves to make.

1. Boost your credit score

Buffett is a fan of the 30-year mortgage partly because it can be an affordable way to borrow. But if you want to increase your chances of snagging the lowest interest rate possible on a mortgage, aim to get your credit score into the upper 700s (or higher). That way, you'll be more likely to qualify for the best rate any given mortgage lender is offering.

If your credit score could use some work, make sure to pay all of your bills on time and pay down some credit card debt, which could be driving up your credit utilization. You should also check your credit report for errors -- and correct any that may be dragging your score down.

2. Improve your debt-to-income ratio

Your debt-to-income ratio measures how much debt you have relative to what you earn. Like your credit score, it's another important factor lenders look at when determining whether to approve mortgage applicants and what rate to give them.

Too high a debt-to-income ratio sends the message you may not be able to keep up with mortgage payments, and that's not a message you want to send. You can lower your debt-to-income ratio by paying off some existing debt, or by raising your income.

Now raising your income doesn't necessarily mean marching into your manager's office and demanding a raise. It could mean getting a second job for a while -- which, incidentally, could make it easier to pay off existing debt.

3. Sock funds away for a down payment

You don't necessarily have to put 20% down on a home you buy. But if you take out a conventional mortgage and don't hit that mark, you'll have to pay private mortgage insurance, a costly premium that can make your monthly payments more expensive.

Now it's worth noting we're starting off 2022 with home prices at elevated levels. Prices could come down as the year ticks along, especially if housing inventory picks up. But if prices hold steady, it means you'll need more money than usual to put down at closing. If you're able and willing to take on a temporary side gig, it could help you scrounge up more available cash.

Owning a home could end up being a wise financial decision. But don't just take Warren Buffett's word for it. Think about your personal goals and determine whether homeownership fits in. And if you do decide to try to buy, follow these tips to position yourself for success.