Its people like you that keep the "game"growing. 

So it's either this or play video games until bed-time.

It is a numbers game. 

Maybe it's not the realtor's job to understand the market; it's their job to find a house that fits the buyer's well-established criteria. 

And, if I had an expensive emergency, I can get the funds to cover it.So, I'm trying to figure out my best game plan.

You could get it for as little 3.5% down with FHA financing, and with a fourplex you could probably cover all the expenses of the home and live there for free.That way, instead of paying $1,000 to $2,000 per month in rent or even towards a mortgage, your mortgage is paid for you (by the other tenants) and you can save that money to pay down debt, invest in the next property, make improvements to the home and increase the value and rent, etc.That could get you in the real estate investing game AND cover your living expenses, despite California's higher prices.

I am waiting to hear from my attorney on the repercussion of canceling the contract this late in the game as I am scheduled to close in a week or so. 

Every property is different, and keep in mind - like playing the computer in a chess game - HUD will often change the rules as they go.  

You'll be ahead of the game by skipping an architect and going straight to a self storage conversion kit manufacturer like Trachte or Janus. 

Our posts crossed so I was not aware that your mother was fine with both options (payoff now or installment payments).As Jeremy posted, it now mostly becomes a math game regarding what is in your best interest but I would still weigh the value of 'making good' on the original loan from your mother.