I give my mother’s sick neighbor $500 a month. She has agreed to sell me her house, although she will continue to live there. Is this a good plan?

Dear Quentin,

A few years ago, I moved in with my mother so she could retire. I’m 55 and she’s 77. She had no retirement savings, but she owns a small house with a mortgage. Every month, I give him money to pay the mortgage and other bills.

She has a next door neighbor who is 72 and disabled and has even worse problems. Her husband’s death (following a long illness) has left her with very little money, no family in the area, and a Social Security check that doesn’t cover her food and medicine.

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I gave my mom’s next door neighbor about $500 every month to keep her afloat. He doesn’t like to ask for or accept help, but he can’t do without it. I once offered to buy her house and let her live there, rent-free.

Still, she said she wants to leave her house to her niece. Since then, he changed his mind and asked me to draw up a contract. I am looking for advice on how to proceed. Are there legal templates online that might be helpful?

I confess I feel like I’m giving him a reverse mortgage. I don’t want to take advantage of her situation, but the money I give her could also be used to pay off my own and my mother’s debts, or put aside for her own pension, which is currently underfunded.

Daughter, neighbor and friend

Related: Reverse mortgage, sell the house or Medicaid? How can my parents pay for long-term care?

dear daughter,

If you could afford it, I would give you the green light. From what you say, however, you can’t. There are real estate purchase agreements available online, but again – should you decide to go ahead with this plan – I urge you to hire a real estate attorney. Don’t do it alone.

That being said, I’m going to give it to you straight: Given that you and your mom are in debt, you can’t afford to give money to your mom’s next-door neighbor. You are not responsible for her, even if her modest circumstances awaken your charitable and generous nature.

If your debts are credit card debt and/or personal loans – you should pay them off in full before spending money on yourself or anyone else and it should reduce your expenses. You just can’t keep giving it at the expense of your and your mother’s future.

Furthermore, you made this lady an offer, and even after she received a monthly stipend of $500 from you, she told you that she has a niece who will inherit her house. And so it should be. Her niece, if she is her only living relative, should step in to help.

You will have your mother’s mortgage to pay on top of this woman’s mortgage. Can you afford both? It’s time to sit down with a financial advisor or accountant and review your income/expenses and savings before making a decision.

You can be the one helping everyone, including this neighbor who clearly needs help, but you risk ending up in the same position 20 years from now, wondering what you did with all your savings. Every $500 you give is money that could be invested for your own retirement.

I agree that a reverse mortgage could be a solution to your mother’s neighbor’s problems, and you can certainly help her do that with her own bank. If she relies on capital and doesn’t have enough money for her day-to-day needs, she’s a prime candidate.

With a reverse mortgage, she can use her home as collateral for the loan, but instead of making monthly payments, which she can’t afford at this point in her life, the loan is paid off when this woman dies and/or no longer lives in house full time.

But reverse mortgages are not a free lunch. Your mother’s neighbor would still have to keep up with property taxes and homeowners insurance, pay for home maintenance and upkeep, and use the property as a primary residence.

“With a reverse mortgage, the amount the homeowner owes the lender increases — not decreases — over time,” according to the Consumer Financial Protection Bureau. “This is because interest and fees are added to the loan balance each month.”

Interest and fees are also added to the reverse mortgage balance. “As the loan balance increases, equity decreases,” the CFPB adds. “Homeowners or their heirs will eventually have to repay the loan, usually by selling the home.”

You can’t be all things to all people. You have a responsibility and a duty to help your mother, but if you spread your finances too thin, no one will win – least of all you. You can, however, give your loved one the time and moral support to help them make the right decisions.

More columns from Quentin Fottrell:

“Always managed to play golf”: My husband of 14 years has never worked and we are now divorcing. He wants half of my million dollar house. What can i do?

“I’m Terrified”: My Grandpa Cosigned My Cousin’s Student Loan. After my grandfather died, my cousin skipped town. Will the estate have to pay the debt?

“Worst-case scenario, we fear a stock market crash”: We are “healthy boomers” in our 60s with a net worth of $4.2 million. Is it time to diversify?

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