MARY THE BOOKKEEPER: I think selling your own home to buy two other, smaller, ones is too hasty a move. People quite often don't tell you everything that is wrong with a house they put up for sale.
Even inspectors can miss things. Besides putting you at future financial risk, it also opens the door to future friction between you and your sibling. If you buy a house for them, there will always be an unspoken feeling of "obligation" being owed to you which can easily taint future interactions between the both of you when disagreements of any nature arise. It just comes with the territory after the "warm glow of relief" has worn off. If you buy two lesser homes and keep both in your name, can you still afford the mortgages, taxes, physical upkeep on both homes? They sure can't because they have no $$$. You will be legally responsible for all major upkeep at least. Who's going to pay for the water pipe that breaks? Who will pay for the furnace repairs when needed? Who will replace the well pump, if the house has well water. Who will pay to have the septic tank emptied if house is not hooked up to town septic? Who is mowing the grass, pruning the shrubs, raking the leaves? You will need additional insurance to guard against possible future injury claims on both properties by the residents and any guests they may have over. (They will make friends and have guests over eventually). Also, your current mortgage will not be divided in half. Both new properties will have different mortgages with today's inflation rates and percentages being applied. You could easily end up paying more per month in total mortgage payments, alone.
It would be cheaper and safer for you if you simply put an additional bedroom on to your current home, if you can. Or buy a pullout queen-sized sofa-bed. You are giving them a temporary haven. Perhaps you don't want to do this because you may be afraid they will be living with you for too long a time and that is why you are considering other ways to "help" both them....and yourself.
Couldn't you simply rent a small apartment for them instead? Even a studio-efficiency type would be fine for now. Take out a small personal loan - or a loan for "improvements" against your own home. Pay whatever the apartment's landlord requires (First, Last, Security). Stock the apartment and move your sibling in there. Whatever is left over from the loan can be immediately repaid with a much shorter time to repay what was used. Since your sibling has no income/savings, you would be paying to get them set up in their new home anyways, so this would not be an additional expense to you if you went this route.
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