The home inspection was completed prior to the seller passing away so all contingencies were lifted. 

A portion of it to reserve for refinancing and most of it to pay off credit cards and prior debt.

Sometimes owners are unable to fix or update these issues prior to close.

@David ChappellA few key things to point out:You will need to change vesting on the deed back over to your personal name prior to beginning your conventional application. 

Furthermore, as an investor and a turnkey provider I love that section 8 has a vigorous inspection prior to the tenant moving in.

If they were already under contract prior to you signing, then the lease is probably not valid.

As a follow up, is 12 months the minimum owner-occupancy period prior to a refi and change of primary residence?

Back when I was brokering commercial real estate 100 years ago I had a deal on a small office building fall through when during the walk thru just prior to closing the buyer insisted on checking the candy vending machine and verbally to;d us and sent us a follow up letter informing us that he wasn’t going to close because the Baby Ruth’s in the candy machine were stale.  

In most cases the repairs will have to be complete prior to closing, but there are some circumstances where the lender will permit an escrow holdback to allow the repairs to be completed after closing.

Based on your numbers, do you have a general idea of the total valuation of your entire property prior to and after the junior ADU?