Inspections, Decisions, Headaches - oh my!

(Disclaimer: I am long winded and frustrated...read at your own risk :-)

I really hate this process, especially trying to do it from out of state!

Long story short, we got our inspection report on the house we are under contract for in Michigan. It told us about what we already knew: it's an older house, it has some needs, the roof and the furnace are near the end of their life.

I'm trying to balance that out with everything else. We really feel that this move is an opportunity for us to make some financial progress after taking a huge step back over the last 3 years. Sure, we could "afford" more, but then we'd not be getting ahead - we'd be house poor. I'd still be scraping together pennies every month, working the odd jobs, putting the airfare on credit cards just to go see my family. This house is going to be almost HALF our current mortgage. To me, that is huge. That is breathing room. It is credit card free vacations, it is lessons, it is grad school. It's not like we have unlimited funds to buy the perfect house.

We looked at LOTS of houses while we were in Michigan. In the price range we want to stay in, these are our choices:

a. Short sales - not really workable. For one thing, the homes aren't any more amazing (or amazingly priced) than anything else on the market. Plus, you have to deal with a third party, which our realtor says is a months long process and not a guarantee. Two moves, not necessarily a better house, headaches. No thanks.
b. Foreclosures - I can't honestly say we saw one (and we looked at many of them) that did not have major issues. Major. Issues. Sure, the price might be great, but these homes were trashed. There are reasons why people walk away - either the house itself has problems that the owner did not want to deal with, or they just ran out of money and trashed the house in the meantime.
c. Older homes - what we ended up going for.
d. New construction - there are some great deals out there in new construction right now. However, most are very remote from where work is. They are smaller. They are not ready to be moved into yet. It would still be more money (by $30,000 minimum) than the house we are going for, less square footage, longer commute. Affordable and less maintenance for now, but less breathing room.

(Sorry, this is getting long, this is my venting lol!)

To me, a relocation choice is about so much more than "the house". It's the neighborhood, the location, the schools, the lifestyle, the price. Everything about this house feels right except that it needs some work. I look at this house compared with our second choice (new construction) and I think - okay, $30,000 difference in price. So, what if I put the $3,000 into this house instead - how does that balance? We'd have a bigger house, with a better commute, with great schools, with a new roof and furnace and kitchen in the end, and be in it the same amount of money. Ninety percent of what is "wrong" with this house is very minor stuff. There are a few big things, it's a 40-yr old house. But for the price and the square footage, I still think it's a fantastic deal.

Let's say we can get another year or two out of the roof (I think that's a fair guess based on the inspector's report), and same with the furnace (actually, he said that the furnace has been very well maintained and is functioning very efficiently and well - it's just that it's as old as a furnace usually lasts. It could still go awhile. Or it could break down tomorrow.) That's a year or two with a very affordable mortgage while we save up for these repairs we know we're going to need. Even if it needed fixed immediately, it's still less than a higher mortgage would be. Right? What am I not seeing here?

So, at this juncture we have to make a choice. Friday is our deadline to back out of the offer based on the inspection. We stick with this house, move in in three weeks, and start some repairs and saving for others. Or, we find an apartment and start looking again. Move twice, maybe changing wards and schools and all that stuff that matters to me. There is no way I'm buying a house without seeing it first. We looked at too many that looked fabulous online and turned out to have big issues. Even if we had friends and cousins and realtors look at it for us, I just don't feel comfortable with that at all. Besides, we'd never get that done in time anyway...we're moving in 2 weeks from Louisiana no matter what. We have to have somewhere to go. It's either a rental or this house.

What think ye?