Second, the renovation/construction budget is usually structured on a draw schedule, where the funds are held in escrow and released as work is committed.

Just don't get stuck with lots of fees typically associated with 401k's mutual funds and some insurance products.

This means the interest rate gets bid down to al low as 1% and the price of the homes is bid up to an amount higher than you can sell it for.  

I would probably keep the other house regardless of what I do because of the low interest rate.I am now wondering if I should hire a Qualified Intermediary (my realtor calls this an "Accomodater") so I have the option to buy a one level rental, stay where I am at, and if in the future I am unable to live in the two level home I am currently living in (our second home that is my primary residence), convert the rental to a primary residence.

Success hinges on staying up-to-date on market shifts, funding choices, and chances for investment.

@Cora Gilmore they are legally required to give an owner a 1098 for ALL funds collected on behalf of an owner.

Typically the bank will not provide funding because of the liability risk of the it not only on your site but if it made its way to other parcels.

I'm basically 50/50 right now between real estate (accurate equity assessment) and stocks (index funds/401k, roth IRA etc).

No thought to the destructive nature of what a low rate would cause. 

You'll fund that guidelines vary from lender to lender.