Yes, it's a great time to buy a house. Interest rates are down and prices are too. However, there are a few things you can take away from the recent foreclosure crisis to consider when buying a house:
1. Get a fixed rate mortgage. Adjustable rates only make sense when the interest rate is very high. The banks are pushing them because they're a great deal for THEM right now, not you.
2. Don't buy more house than you can really afford. Just because the bank approved you doesn't necessarily mean you can afford it. Use your own budget as your guide, and make sure you leave room for the unexpected expenses that always come up--car repairs, etc.
3. Check the taxes and insurance. The property tax amount quoted to you is almost never right. Usually, it is what the current property owner is paying, which may have been set based on the purchase price 20 years ago! The new property tax rate will most likely be based on your purchase price, so call the tax assessor's office, give them the address and price, and get an accurate estimate. Also call your insurance agent and get an accurate insurance quote. Make sure you set up an escrow that is high enough to cover both of these amounts.
4. Establish an emergency fund before buying a house. If you don't have enough money saved up to cover six months of living expenses in case of a layoff or an injury that keeps you from working, you should probably wait to buy a house until you get your finances in order.