Thinking about buying a home, but not sure how to afford it? Welcome to the Down Payment Diaries, where real people spill about how they saved and splurged on their path to homeownership. If you’d like to submit your own Down Payment Diary, please fill out the form here.
Today, a Phoenix family uses a cash-out refinance and a bridge loan to buy a new home when they’re priced out of renovating their old one.
The basics
Age: 45
Marital status: Married
Occupation: Marketing manager
What was your home experience growing up?
My parents owned the home I grew up in. Home ownership was a value my dad instilled in us, teaching us that it was a sign of success.
Was this the first house you owned?
My husband and I bought our first house when I was 30. We loved that place and stayed for 15 years.
What led you to start thinking about buying a new house?
As a family, we were outgrowing the house. We have two girls, and they were sharing a bedroom. In 2021, we did a cash-out refinance, with the plan of adding on two primary suites, one for me and my husband, and the other for guests. This would also give each of the girls their own bedroom. Then we got delayed by permits as well as building quotes that were way off the mark. By the time we got back on track to build in January 2024, construction costs had skyrocketed, and the addition became unaffordable.
What was the housing market in Phoenix like at the time?
We started looking in earnest in the summer of 2024 and things were looking bleak. Homes had been sitting on the market that nobody was buying, and nothing new was coming. Plus, everyone kept telling us that the housing market is so unpredictable in election years.
What were you looking for in a house?
We wanted to be close to our older daughter’s school and we also really needed three bedrooms.
How long did you look before finding your home?
Actively for four months.
How many homes did you see?
In person, we looked at 10 to 12. Of those, only two were contenders. We put in an offer on one and won, but inspection revealed that the home needed a new roof. The seller didn’t want to meet us on price, so we backed out.
How did you know this was the one?
At first we didn’t. It was more square footage than we needed, but it was listed as having just two bedrooms, because the third “bedroom” didn’t have a window. We also didn’t love how the house looks from the outside. But we couldn’t get over the location—just 10 houses away from the school—and the price was right.
How did you save up for the down payment?
The cash-out refinance we did in 2021 for the addition gave us the down payment for a new house.
What kind of loan did you get?
We needed a bridge loan. We couldn’t qualify to buy a $700,000 house without one, especially as our old home wasn’t even listed when we made an offer. Unfortunately, we became the targets of a very predatory lending company. The day we were about to sign the paperwork, my husband reread everything. He couldn’t make sense of the numbers. Worse still, we just didn’t understand the terms of the loan. Luckily, the whole deal was a remote transaction and we were able to pull out. Our Realtor® was able to find us a new lender who found us a different bridge-loan product that was so much more affordable, answered all our questions, and set us up, free of charge, for a refinance of the new house 90 days after our purchase so we could get a better rate.
Do you have any advice for prospective buyers?
Don’t be afraid to ask questions. You need to understand any financial agreement you commit to, and these loans can be confusing!
How are you making the space work for your family?
We’re converting the back living room into a primary suite. We’re also adding a kitchen and a bathroom to the garage, which had already been converted into a mother-in-law suite, so it can function better as an Airbnb rental. We’re hoping that brings in at least $1,000 a month, which is a quarter of our monthly mortgage.
How are you paying for the renovations?
We’re paying the $60,000 out of pocket.
Do you have any regrets?
Immediately after we got under contract, we started seeing tons of houses that checked all the boxes. I had to stop looking at houses online because it was so upsetting. But, you really can’t time the market. All you can do is decide if the option in front of you works, knowing that there is always a better option out there somewhere, at some time.
Do you feel like this has been the right purchase?
Absolutely. We love the location. It’s so walkable to everything in central Phoenix. We even have a restaurant and a coffee shop within a few blocks, and our oldest daughter walks to school. In the end, it worked out so well that we are still pinching ourselves.
