However, their terms involve a 20-year amortization, a 5-year ARM, and a rate of prime + 0.5% thereafter.I’m exploring other options for financing and would appreciate any suggestions or advice.

Hi There-Some feedback would be great- Do you Sell the house yourself or do you engage another Realtor to do the sale and keep it at arms length in order to reduce any liability?

Yes it explicitly allowed things like the term and rate, and I wrote that it should exclude anything additional which is unnecessary since I couldn't be there to read the closing docs themselves (which I assume can vary depending on what the branch leader/loan officer wants for the nonconforming loan).  

They added the investment arm in 2019.

It's easy- often the properties are already rented and managed, and you can be arms reach away from the property while someone else takes care of it. 

If the tenant does not keep the basement clean to an extent that it might be attract mice.The contract does not have any explicit language stating "Failure to do so will results in penalties or such and such...".I dislike sending multiple reminders.

This is often easier in lower tier markets where the appraisals are not indicative of how the property would sell in an arms length transaction.The other risk you run is over extension.

That means either you won't cash flow or your Return on Equity (ROE) will be terrible.Since this is your primary residence you'll be exempted from paying capital gains taxes when you sell.If you sell to your parents, it will be considered a non-arms length transaction and will get closer scrutiny.

It does not explicitly say in the lease other than the inability to sell illegal products.

A 5 year arm might be a bad idea in this case.