As the year comes to an end, people  generally pick up their spending because, after all, they want to be generous to their family and friends, right?  Reconsider if you're at all thinking of buying a new house next year. Yes, there is plenty of money available for mortgages but only if you have stellar credit, so pay cash for your gifts, and keep to a budget because you don't want to regret your gifting.

Here's what not to do if you're thinking about buying a house in the early part of 2008.

1. Don't buy a new car on credit.  Wait until after you close escrow before buying that car.
   
2. Don't make any major purchases on credit.  Buy the furniture after you move into your new home.
   
3. Pay cash for your gifts.
   
4. Pay down your credit card balances.
   
5. Try and put money into savings
   
6. Don't change jobs unless it's a transfer, new job in another area, a jump in salary.
   

 This is also the time of the year families might gift funds.  If you are lucky enough to have family in a financial position to do this, put the money into a savings account for your down payment.  You may need to show proof of funds to a lender, so don't be surprised if you are asked to provide this.

The underwriting process lenders are putting prospective customers through is going to be thorough and lengthy.  Be prepared and give them everything they ask for which might include tax returns, pay stubs, and copies of all of your investment accounts.  This will be the norm from now on.  The mortgage industry has come full circle from what they used to require. 

It will all be worth it once you find the perfect home and you've closed escrow.  It will be all yours and what will make it better is that you will have skin in the game, and with money down, you have a little bit of equity going in.