If $7k is enough to make this an either/or scenario, you don't have enough cash cushion to be buying another house, IMO. How does the rest of your financial picture look? To me, if $7k isn't essentially pocket change, you should not be buying $100k illiquid items.
But that's just me. If your numbers are right, it sounds like a decent opportunity. I will warn you that foreclosures are really not cheaper than the overall market - if the comps are $150k, it will probably sell for around $150k. Banks aren't stupid, and they're not desperate anymore, either.
-W