Of course, that could be offset as he works to reduce inflation.

If you're using traditional financing on your primary residence, they're going to do another credit check on you just before closing.

Mostly from a home equity line of credit.

Should We:Sell, take advantage of the capital gains law, move, and pay the mortgage off on the new house, credit cards, etc…?

Far more than most real estate acitivies and much quicker think about it.. you sell the same info over and over and get paid instantly you have no roofs to fix no tenants to manage etc etc.. you do have reputation management of course.

Do not overly complicate the letter, or you will scare sellers and tenants.I want the tenant to sign, of course.

Subject to tax liability on the gains of course, but it gives you more flexibility.  

Down payment amount varies and more you put down the highre you will be in the queue of applicants, also down payment varies per your credit...Dodd Frank IS in play!!

If the applicant comes from the pool of people that I or my tenants know, I use real estate as a way to give back as many of my tenants will not qualify credit wise or may even have a criminal background or would struggle for another reason if I were to just stick to the "background/credit check" criteria. 

I would say credit monitoring