Purchasing my first home

Back in 2006 I realized that I had the means to purchase my own home and decided that before I turned 28 I wanted to be a homeowner. I spent the remainder of 2006 getting my finances in order, improving my credit score (kind of wrecked it while in colllege), and saving as much as I could. I also researched financing options and spent countless hours on the multi-listing site in my city watching to see what was available in my price range. Immediatly I knew that if I wanted to be able to afford a house, it would have to be a a fixer-upper, wasn't going to be my dream home this time around!
In July of 2007 I finally felt ready to apply for a loan and begin the search for a home. I really felt it was important to be pre-approved by my bank prior to my search so that I knew what I could spend going in and had better leverage when making an offer. July was an incredibly stressful month, cause it took nearly a month to be approved for a mortgage. Remember I mentioned my destroyed credit score, to go along with that I also have a mountain of student loan debt, none of which was in default, but still I had alot of debt out there. Finally, after providing the bank with every sort of possible documentation, I was approved for a $70,000 mortgage!!! The loan would be through South Dakota's First Time Homebuyers Program and included a grant that would help cover closing costs or a down payment.
On an extremely hot day in August with the assistance of my realitor and the advice of my father I began my search. L, my realitor, had seven homes for me to take a look at, six of which I was interested in and one that I agreed to see, but was pretty sure I didn't want. The first house I looked at was beautiful, cherry cabinets, granite countertops, laminate floors, every thing was new, but the house was TINY!! We are talking only about 600sq ft, 1 bedroom, 1 bath. No dining room, no guest room, nothing. Price if I remember right was $69,000. The next house was decent, on a busy street, needed cosmetic work and then came the basement, the walls were caving it. This was a problem I was going to have to be watching for. The previous spring my city flooded and a lot of homes now had foundation troubles! The next several houses were no's, they all had so many issues with foundations or they were just not usable spaces. Last house of the day was the house I didn't want to see, I was pretty disheartened, thinking I would never find anything I could afford that was in decent shape. The house we pulled up to was ugly on the outside, but in a decent neighborhood. The first thing I remember about going inside was the smell, lots of smoke, dirt and old people smells. The house was dark, crammed full of stuff and filthy dirty. It was hard to even tell what you were looking at. But my dad and L thought the house "had good bones". Part of the foundation had been replaced seven years earlier, it had a new roof, a garage and the basement was partially finished. I just needed to get past the cosmetic issues!
I said I would think about it. A week later I brought my mom and then boyfriend to take a look at the house. The boyfriend was no help, he thought I should tear the roof off and add on, my mom thought the house was doable and said she would help me work on it (thats yet to happen!). I thought about it for another week and near the end of August I put in an offer.