The first question is, can I use a second home mortgage (10% down and lower interest rate) for this. 

I have found people willing to owner finance their house to me at a lower interest rate.

A quick check of new listings results in many listing that seem well below market rates.   

If you budget the negative cash flow over the course of the hold period and have reserves set aside to fill the gap, there is no problem (assuming your investment meets your target appreciation rates - I understand there is no guarantee there). 

Rates are pretty low, maybe $30-50/night.

If its an attorney closing state same thing ask the attorney or one of their staff.Generally though be care of those reaching out and promising rates that are simply better than current rates thats almost always a fake lender or a bait and switch..

Keeping a 2.99% rate sounds great, but it may be costing you thousands of dollars if you are in the double digits with your other outstanding debts.

Places like San Antonio might present more favorable cap rates, from what I read in Forbes recently.Refinancing could free up equity if today’s loan terms are more attrative, though that depends on current interest rates and the property’s updated value.

Louis Fed shows the delinquency rate on residential single-family mortgages, and proves there's a way to spin this data to show that delinquencies are increasing rapidly.

You'll either have a higher rate for no prepay, or it will cost you points at closing.