I'm looking for suggestions on how I might fairly structure a deal and still keep the current mortgage I have, at 3%.

How many kids get to play minecraft or COD on a big projector screen right? 

If location isn't a big factor (does not seem to be based on original post) I would highly recommend looking into building a barndonium or shouse in an an area where you can get a tract of land fairly inexpensive and has little zoning regs and requirements.

Fair enough.

Asking for a prequalification letter from them seems like an easy and fair exchange.

You say the contractor is resubmitting the revisions but where is the architect and what role is he/she playing?

To be fair, some of those issues may not be covered such as contractor's cheating you and I have never seen a pipe burst cause a total loss.

Yes, to be fair, if it's a straight-forward all-cash purchase, then the due-diligence likely could be done in 60 days or so. 

DSCR doesn't require the property is rented, but with the loan amount at play that would not be an option for everyone I've heard of. 

How do you fair late in the year rehabbing/ flipping houses?