You are going to see these benefits in the long term, and while you live there you will save on your monthly expenses and also get tax benefits doing so. 

If I have to pay taxes on my income, SO DO THEY!

You can always "borrow" or withdraw the principle since you already paid taxes on it.  2. 

It saves alot on paperwork, bills, etc by combining everythning on one policy,

It's not too hard to save up a few grand to pay a buyer agent.

The value around $20k according to the local tax office.

If I continue to pay the mortgage in the the seller's name (with out refinancing) would they claim the mortgage interest tax deduction or do I get to claim that since I am paying the mortgage and hold the deed to the property. 

Even if you are actively operating as an STR the lender will look to tax returns for income, so if it has been less than a year they will still go on LTR income.You need to factor in that your lender is going to underwrite any loan based on LTR income only. 

If it is possible, is there anything else I should consider before talking to lenders (namely, any tax implications). 

I got about $4200 back on my taxes last year because of depreciation, and it felt great!