This seems odd to me because in a perfect scenario you would get a HML to fund 100% of your deal with no money out of your pocket, rehab the house while paying your monthly interest payments to the HML, refi a few months later to pay them off but also cashing out and getting a nice chunk of cash?

As to why you would be charged a higher rate for a smaller loan amount seems odd to me?

There is only a little over $3k left (a significant amount to me, but not enough worth trying to take him to court).The odd part of this situation and where my question arises is that his mother is offering to pay what's left under the auspicious that I will not tell him she did so.

Justin Is correct about Texas - we have some odd stuff here. 

The house has 2, 3 bed/1bath units and was built in 1910 with a fairly odd layout.

Both properties need small odds and ends done to them but nothing major, I believe I can do the work I want to on both properties for less than 5k dollars.I have been contacting ins co and receiving quotes still have not decided on a company yet though.

All things are relative though, because the 1% "rule" doesn't take into account the exceptional year over year price appreciation we've been experiencing over the past 7 odd years. 

I enjoy video games (Destiny, NBA 2K19, Fortnite), Movies, TV and hanging out with friends over a drink or a cigar.

Cash is what you need in that kind of melt down but I never had seen credit freeze like that before and hopefully never will.For me if I was thinking there was going to be another market correction of that magnitude I would have my powder dry and  have my commercial bank in tow.. my one major commercial bank stuck with me and kept our credit in the mid 7 figures but we were on 90 day reviews full financial every 90 days.. it was an odd time.  

Very odd.