My daughter bought a home for me, but now she needs cash and refuses my help

Dear Moneyist,

I moved from Mississippi to New Orleans a year ago. I sold my house (at a loss) and bought a house that was more than double the cost I had sold it for.

I am divorced from my husband after 40 years. He passed away three years ago. He was a hard-working man who invested well and made a large sum of money. He managed my accounts and stressed the importance of not spending more than my dividends on my investments.

My daughter lives in New Orleans and I moved to be closer to family. I am in good health and active, but learned after her father died that I needed to look down the road at the prospect of aging and decline.

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She inherited a good portfolio of investments and had over $500,000 in cash. She bought a house for me and paid in cash. I pay $2,000 and 3% interest to her once a month.

They need to buy a larger home now and I want to give this money back to her, or at least half of it. She is adamant that I not sell my stocks to repay her. She is cash poor now and it bothers me that I am the reason. I would have to sell off certain stocks and the market is not great right now.

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My financial adviser said I had several stocks that never made any money on and taking losses would help with taxes I pay.

Can you help? I’d do anything for my daughter and would like to make the best decision I can. I do have a good portfolio but a bad market. Thank you again for any help you can give me.

Concerned Mother

Dear Mother,

Firstly, tell your daughter you would like to do this for her, and you feel it is the right thing to do. Unless she truly balks, then proceed. But it may be that this is a “want” rather than a “need” on your daughter’s part. Secondly, that sounds like good advice from your adviser. Listen to him or her, and make sure you have enough to live on. Thirdly, find out exactly how much would help your daughter. It may be that you can reach a compromise on the amount of money she requires to upgrade and how much she is comfortable with you providing her.

And as one of our Moneyist Facebook members pointed out, this decision to buy you a home was made jointly. Your daughter clearly made this decision as a grown women in consultation with you and her husband. It must give your daughter great peace of mind to know you have a roof over your head and your independence. There’s no point in accepting this quasi “grace and favor” if you are going to blame yourself for this situation and feel guilty about it. Your daughter did what she believed was best because of how you raised her. Take comfort and pride in that.

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It may, indeed, make more sense to refinance rather than have all of this cash locked up in the house. Your daughter may have to guarantee that loan, but it could help solve this cash flow issue in the short- to medium-term. As we state on the MarketWatch Mortgage Calculator, “Knowing exactly the right time to refinance your mortgage would require a bit of psychic ability on your part.” But, yes, the Fed is increasing rates. Still, it’s worth considering with help from your adviser and bank manager, if your daughter is happy for your to proceed.

Ultimately, this is a decision you make together rather than a problem that needs to be solved. Unusually for this column, this issue is born out of family members trying to help each other rather than do each other harm. From that perspective you’re in a win-win situation. As another Facebook member, who also favors you taking out a small mortgage to help your daughter out, observed, “It’s lovely to see the opposite of so many other questions here. It sounds like you raised a thoughtful, generous daughter.” I agree.

Your daughter learned these life lessons from her parents. She invested wisely like her father and wants to help others like her mother. Good luck with whatever you decide.

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