C, Perhaps you might consider this suggestion...Take the next 6 months to a year to work on repairing your credit. I suggest this because during that time you would also be able to inform yourself about the current programs available and see what developes as far as new programs the Gov. will be creating to stimulate the market.
You may find yourself in a lot better position to buy, be more informed about your desired market area, and have new programs available to use.
Here is the Gov. site for all gov. loans. Check out the current housing loans, determine if you might be eligible for any and keep an ear open for new ones.http://www.govloans.gov/govloans_en.portal?_nfpb=true&_pageLabel=gbcc_page_browse_loans&_nfls=false&action=locateLoans¤tSubType=6
Check out the Hud site...http://www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm
Mortgage rates and trends....http://mortgage-x.com/general/rate_trend.asp
http://www.fhfa.gov/ ...home price index and a lot of info
Gov. site for mortgage info, calculators, and a ton of othe info..http://www.ofheo.gov/PublicInformation.aspx?Nav=136
A large financial committment like home purchase deserves a little effort in making sure you can afford the purchase and get the best deal possible. If you decide to take time to see how things develope you may also want to keep checking in on Trulia to view questions similar to yours or different opinions of the market, purchasing processes, foreclosure/REO info ect.. or you can participate.
Whatever you decide I wish you good luck, Dunes