Most banks doing the refinance will require a payoff of the original loan plus any additional fees / accrued interest / penalties. 

Make sure the sales contract includes a contingency clause that allows you to use your own appraiser and also allows you to walk away and you get sent any fee that has not been earned including any deposit you made nor any penalty, if the appraisal comes in too low or does not support the sales price.One way to make more money is to offer the existing Tenants, if they have reliable history on their lease obligations, a "lease option" furnished by you. 

I would love to seek the guidance of some of the more experienced fellow investors and/or a professional on whether we can take advantage of this rule?

The penalty is usually about 20% of the taxes you tried to save.

I have sufficient funds for a 20% downpayment, but am debating if it might make sense to use an FHA loan only and put 3-10% down instead to keep some funds available for seeking out future deals.Loan would probably be in the $400k range, which means3.5% = $14,00010% (MIPS for 10 years) = $40,00020% (no PMI) = $80,000Of course I'd take the 0.88% PMI hit by going FHA which really annoys me given that interest rates are rising already. 

Seek it, join it, add value somehow and you'll be on a good path in a matter of months. 

Tandem coffee in Portland Maine is the type of coffee destination that I seek out when traveling.

Seek a mentor in your area that can lead you to good contractors.

I think if you tie the money you're seeking to the real estate (mortgage, hard money), there will have to be a lot more evaluation than can be done in a few days.

You can also seek out a 'Qualified Opportunity Fund' which is basically a syndication with the underlying asset being in one of these zones.