Sometimes, partial renovations can be significantly cheaper while still resolving the main issues.Rent Adjustment Considerations: If you decide not to raise the rent to cover the cost of repairs, communicate clearly with your tenants about the situation.

I would also only want to live upstairs for the noise considerations.

An important consideration is the max LTV she's offering, points, general rates and financing periods.

Coming from an experienced real estate agent we will take this into consideration when we need to edit out referral program. 

There is a lot going on and tons of competing considerations. 

My ceiling height is 6'2 in the front and 7'5 in the back of the house, so I know I'll need to do a dig-out.  

She is the only real estate investor there,  but you have to take into consideration that she is fully aware of the low success rate of their program and that she is there to keep the engine going for their educational business, which is the real nature of their business, making money on the program. 

Also, does the basement have the legal height you can run into underpinning and digging out the basement (Some moving parts - there could be piping in the basement floor, etc.)Lastly, If you finish the basement and not approved and permits pulled correctly.

About the basement: It's partially finished (drywalls and ceiling only) with no bathroom or kitchen.Since it's a considerably smaller house, I am not sure if this would add significant value to the house if we sell it say 5 years down the line.

Most basements in DC are too low to get legal heights.