The suggestion of forming a team here is best. You need to know what the history of the home has been as well in order to make a solid decision.
To answer your question correctly, you'll need 3 people team and a little money. You'll need a local Realtor for your area, an appraiser and a home inspector.
Once you have concluded your research and interview for a Realtor, then they can help you find the other two service providers. You can then have this team of professionals give you their collaborated opinion.
If I was to invest this large of an amount of money, I would want a team of skilled professionals in my corner aiding me in my decision.
As far as your mortgage goes, I think a lot will be determined by how much you are mortgaging. A jumbo loan is not as easy to get as it used to be. Anything over $417,000 is considered jumbo. I would speak to at least 3 mortgage reps in your area. The companies I recommend are Wachovia and Chase here in NJ. Ask your agent for help. Most agents have a few different sources for mortgage money. Good luck!