Have you spoken to a mortgage broker? 

What happens when I stop paying the mortgage payment on multiple properties?

You would want an closed end second mortgage instead of a HELOC for a long term cash use like a down payment.

looking for mortgage broker, lender. 

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The DRE has disclosure documents on line that Brokers use with their investors as well.

The seller is going to give me a note above the amount I still owe on the mortgage.  

Instead, I would have assumed a mortgage for a fairly new home(5 years or less) at a lower interest rate at 2.75% to 4% and used my loan as the down payment to cover the equity that seller was trying to recoup. 

The MIL has owned the property for 4 years and there is no mortgage (purchased in cash by her grandson; I raise this to you in case there are capital gains implications for MIL and DIL when the latter sells). 

Having a 24 month term on the front end will also make my job easier doing the take-out loan when it's time to refinance into permanent debt, because there's room in there for a full year of tax returns to have been done in the middle (if your exit plan is to sell, it'll also make it easier on your buyer who will presumably be willing to pay a higher price if they can get an A-paper good mortgage).Ask for a 24 month term, tell your contractor you want it done in a year (and make it financially worth their while if they can pull it off), internally/mentally plan on 18 months, and I'm putting you on notice now to do your tax returns on time, rather than extending them (don't fight me on this, please just do it).Trying to get a renovation mortgage like this for only 1 point is likely a waste of your time, but if you want to ask, after you've secured the above as a 'done deal,' go for it, can't hurt.