Hi Everyone,
I was browsing this forum for months before I applied for a mortgage. I think I became more paranoid than I needed to be. I had 3 accounts that were collections, but paid off....all about 3-4 years old. I also had 2 unpaid collections for about 3000 a piece that are roughly 6 years old. My scores were 710, 680 and 674. My fiance' works at a local credit union so I knew for sure that I wouldn't have to pay off the collections if I went through them. I also applied at BOA to see what rate they could give me. We put in probably 5 offers on houses and lost all of them before we found a townhouse we were in love with. The townhouse we ended up with is brand new, and the builder had special incentives if we used BOA. I was iffy on this, because I was afraid I'd have to pay off the unpaid collections. BOA also had to run my credit a 2nd time in 30 days because they couldn't just transfer my file. We went under contract Nov 1st and went FHA through BOA. I ended up with 5k in closing costs paid by the builder, a 300 credit from BOA, no origination or processing fee from BOA and a 4.0% rate (30 yr fixed)!! I just got my clear to close tonight!!! The only thing that didn't go smoothly is our processor was not -so-bright and didn't fill out all of the information she needed to on our gift letter, so it delayed our clear to close a couple days while we literally redid the form 5 times. I know I've disputed items on my credit report in the past, and this was not an issue for me at all (I was paranoid about this too.)
Now I can finally relax a little!!!! I'm excited!!!! For all of you beginning the process, don't give up!! And don't let some of these posts make you paranoid! 
Yes is certainly seems daunting based on reading many stories and different sorts of advice. I also think it's a very confusing process for most people, especially when it comes to things like underwriting where there are so many factors that all add up into some huge critical decision. I understand what you mean and thank you for posting; hope is what a lot of us need because it really does seem unattainable sometimes.
Just out of curiosity, how many points did you have for the rate?
Starting Score (10/27/10): 604