If not actually illegal, the a violation of the terms of sale of the note that could result in a lawsuit by the bank.You'll get better advice if you can be more explicit about what's going on and what you're trying to do than if you're vague.

We're very in the beginning of the thought process of how can we see family more often without it costing an arm and a leg. 

No renting of any kind and explicitly mentioned even renting to others who live with you.

Armed with this information, carefully evaluate whether the numbers meet your investment objectives before making a decision.Good Luck!

Yes it explicitly allowed things like the term and rate, and I wrote that it should exclude anything additional which is unnecessary since I couldn't be there to read the closing docs themselves (which I assume can vary depending on what the branch leader/loan officer wants for the nonconforming loan).  

Hi There-Some feedback would be great- Do you Sell the house yourself or do you engage another Realtor to do the sale and keep it at arms length in order to reduce any liability?

Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.3.

However, their terms involve a 20-year amortization, a 5-year ARM, and a rate of prime + 0.5% thereafter.I’m exploring other options for financing and would appreciate any suggestions or advice.

If the tenant does not keep the basement clean to an extent that it might be attract mice.The contract does not have any explicit language stating "Failure to do so will results in penalties or such and such...".I dislike sending multiple reminders.

That means either you won't cash flow or your Return on Equity (ROE) will be terrible.Since this is your primary residence you'll be exempted from paying capital gains taxes when you sell.If you sell to your parents, it will be considered a non-arms length transaction and will get closer scrutiny.