Kashi, you are right, home buying is a big decision and you should look at it from all angles and do your research. However, having done it once I don't think its all that difficult/complex as I used to think it was. I guess we were lucky to have a good agent whom we used to buy and sell both.
I asked the wifey why we didn't have to pay the PMI and she reminded me that we did a 80-20. Which is 20% HELOC (home equity line of credit or second mortgage) and 80% first mortgage. Our interest rate was a bit higher on the 20% but in a year we were able to refinance and roll everything into one for a low interest rate.
As for the cars, the older volvos could be a good low cost alternative to the usual Honda or Toyota models. I have a 88 volvo 240 wagon, its the most practical car I've ever owned. Lots of cargo room, safe and comfortable and very reliable if maintained properly. Ours has 235k miles on it and still runs very well. The only problem is that the A/C is not powerful enough for the size of the car but a sedan will probably be fine. Nice, well maintained ones can be had for around $1500 around here, they do rust if not protected. BTW, the 88 is considered to be the most reliable of the volvo 240s. They are also quite easy to work on and they have a great following and support on the internet. Take a look at
www.brickboard.com if you are interested.
Another alternative is the Mazda Proteges (94-96), they use the same engines as the Miatas and they are bullet proof. The same engines are also used in certain year Ford Escorts so that's another option...I can't remember the years off the top of my head.
For about $3500 you can even find the 94-96 Accords around here. Depends on what you want and how much you want to spend. Feel free to ask if you have any questions for me. Also, take a look at Craigslist.org in your area...
Goodluck.