blackrosegirl : From my experience, you go and get pre-qualified. You can either have them check to see if you qualify for a certain $$$ amount, or they can do a maximum. I would not suggest buying in your maximum – each time my maximum was way over what I would actually be able to afford and live comfortably.
You can check different banks to see what their interest rates are – and all interest rates are dependent on your credit score. If your score is 740+, you should qualify for the best rate they offer at most banks. I checked around at 5-6 different banks and went with the best rate and the one that would work with me the most on closing costs. There will also be different rates dependent on the type of loan you do. A 15 year loan will have a lower interest rate than a 30 year. If you put 20% down you will also have a lower rate as you will not have to pay mortgage insurance (this is completely different from homeowners insurance). You can choose to do an escrow account to make all of your payments come out of the same account (house payment). Your house payment will consist of your mortgage payment, property taxes if applicable, homeowners insurance, and if you do not put down 20% you will most likely pay mortgage insurance for awhile too. Or you can pay all of these separately if you don’t want to escrow them (I do not escrow but a lot of people do – some banks may make you escrow as well – especially if you cannot do a conventinal 20% down pmt loan).
Once you find a house in your price range that you like and want to potentially buy, you will write up an offer with your agent. They will work with the other parties agent to negotiate and see if the seller is willing to take your offer, or if they want to counter offer. Typically you will have to write a check for earnest money at the time of putting in an offer. This is basically to confirm your contract and show the buyer you are serious. This check will come out of the amount you pay at closing. The only way you would lose your earnest money is if an offer is accepted and you end up backing out of the sale for some reason that is not due to a bad inspection. My escrow amount for my first house was $500, and my second house was $1200. It depends on the area and realtor company you deal with. Some have a base amount, and some go based off of a percentage (1-3%) of the price for the house.
Once your offer is accepted, you can have an inspection done – if there are any serious issues (or non serious issues that you want them to fix) you can re-negotiate your contract, or void it as long as you put your offer in contingent on an inspection. In my state you have 10 days to have your inspection done and to make any changes or back out, or you will lose your earnest money. You will typically have 30-45 days before you actually close on the house. This will give the bank time to get everything in order, and will give the sellers time to get things in order. You will normally select a closing date when you are working with your realtor on putting in an offer – but that can be subject to change (it’s normally… “we will close on or before X date”). On the day of the closing, you will have to pay closing costs plus your down payment. My closing costs were around $2k for my first home, and around $1700 for my second home. Also, the seller may have to pay you for property taxes depending on if they have been paid for the previous year yet, and depdnding on how far you are into the year. This will come out of your down payment/closing costs. Your earnest money will also come out of this.
You will get to do a walk through of the house the day of or the day before closing. ALWAYS do this. I opted out of it for my first house because I had been in there a few days before to move my new appliances (with permission of the seller), so I wasnt worried about anything.. and after the closing I came home to a flooded basement! If there are any issues, you can negotiate at the closing – but after you close it is a done deal. My second house we realized a few of the things we requested to be done were not done, so the seller gave us the cash to fix the issues. At the closing, you will sign tons of documents and you will get the keys right then and there. Your first mortgage payment may be required then, or it may not be due until a month or more down the road.
Sorry this is lengthy – I just remember how confused I was when I bought my first house so I’m trying to explain the things I found confusing!
ETA: I’m in Illnois, so this is how it is here – things vary from state to state or even by city/county.