Bee’s, I need some advice - (sorry for the long post!!!)

We are due with our 1st child at the beginning of October and I’m taking 12 weeks, so I should be going back to work in January. We’ve already found a daycare for our baby girl that is close to work/home.

Our next-door-neighbor is a SAHM with a DD in 2nd grade and DS age 4 in preschool. We are very friendly, and always chat when we run into each other, but not super close (no dinners at each other’s houses or anything like that).

I ran into the SAHM yesterday and she told me that she wanted to offer to watch our DD when I go back to work in January. She said she hadn’t thought about cost yet, but wanted to see if we were interested. DH and I are interested, but have some concerns. I’m not sure if we want to go down that path or not… here are our thoughts:

1. SAHM worked in daycare prior to becoming a SAHM, so she has some experience. However, she has not watched any other children (other than her own), in her own home.
2. The cost would be less than daycare by around $80-$100 just based on my research of costs in the area. It would be around $12,500 for daycare vs. $6,000-$7,000 if we used her. That’s pretty significant in my eyes.
3. DD could avoid being in daycare during the super sick months of January – April when she’s so young. Of course she would still be exposed to neighbor’s kids if they have anything.
4. Since her DS goes to preschool, I’m assuming she’d have to drive him and in turn our DD. Not sure how I feel about her being driven around.
5. Since our houses are close, we can sometimes hear our neighbors. She has some pretty major meltdowns that include screaming, it sounds like at the top of her lungs. It’s not all the time, but it’s enough that we’ve noticed. This is probably my biggest concern.
6. If we don’t like how this works out, then we are still neighbors. We would have to see them all the time and of course I hate conflict.

Questions we need to address -
1. Should she have some kind of liability insurance in case something happens to our DD while under her care?
2. Pricing and schedule + some kind of contract to establish relationship
3. If SAHM is sick, then we’d have to work out watching DD. Same thing goes for vacations.
4. If we moved forward, is it weird if we asked for a background check and references?

So, I guess I’m asking what would you do? Of course we need to address some of the questions we have… but I’m trying to even decide if we should move forward at all. THOUGHTS??? Am I missing anything we should address?