Is this house a good buy?

Have you done your homework to know if it is priced right? If so, go for it! Fixer uppers are the best way I know to make a profit.

You don't say what area of the country you are in and prices vary so much that all you can really do is make sure you've looked at other similar properties and feel like it's a good price for the condition of the house. As far as the payment goes...The "good faith" estimate of $1950/month may not include everything you have to pay. Find out if that is principle and interest only. You will also end up paying escrow for your insurance, escrow for your taxes, (maybe these are included in PITI). Since you have a small downpayment you will also have to pay mortgage insurance unless the property appraises for way more than your purchase price. Your actual monthly payment can be several hundred dollars more than the bank's estimate as they usually don't take the other items into account, but will require you to pay them. The house sounds nice, but just be aware of the additional costs of home ownership--lack of knowledge is how a lot of foreclosures ended up happening. If the house is a lot larger than your rental you'll need to account for higher utility costs as well.

I'd be concerned about permits on that addition. If they weren't pulled, then you could be looking at some very expensive problems, and might even be forced to tear it down and restore the building to the original configuration.

Without knowing what state you're in it's kind of hard to answer this question. It's not great but it isn't that bad. The molding and all that could be an underlying problem. You said there was flooding, well flooding under the floor boards and in the basement maybe an issue when getting this place inspected by the state.