Parent as private lender: closing docs and AFM

[Ashley Lovelace]

My partner and I put in an offer on an investment property yesterday. We had gotten pre-approval for an conventional investment mortgage. Well, after putting in the offer, I found out that for this type of mortgage gift funds are not acceptable as the down payment. Now we are scrambling to figure out financing. 

question 1

my mom has offered to buy the property in cash for us to pay her back. We are waiting on a call back from the CPA but does anyone know if there are tax implications for her interest 'income' if she just charges us afr?

Also does the afr have to be adjusted over the life of the loan as the rate rises or is it fixed once the documents are signed?

question 2

is this something we can draw up ourselves in a sufficient way for closing--the note and the mortgage? I understand most people have lawyers prepare these documents but neither party is concerned about legal loopholes. I was just wondering if there was some template of what information needs to be included on both. She'd just as soon we not pay her back at all and there is zero chance I'd take advantage and not do so.

Question 3

Will it be possible to close in 2 weeks as though this were a cash sale with seller financing?

Any insight is appreciated. Turns out we were blindsided by the learning curve when. We thought we had all our ducks in a row and with it being the weekend it is difficult to get professional help!