So this column is written for you and those like you. Instead of first explaining how the market works, and then recommending courses of action, I am placing the "don'ts" and "do's" front and center.

If you are dealing directly with a lender:

Don't select a lender based on interest rate and points alone. (Points are upfront charges expressed as a percent of the loan, e.g., 1 point is 1 percent of the loan.). Doing this leaves it to the lender to set the other settlement costs without your concurrence.

True, the lender must provide a Good Faith Estimate (GFE) of settlement costs within three business days of receiving an application. Trying to negotiate the costs at that point, however, is usually futile. Once you select a lender, you have little or no bargaining power. The numbers on the GFE are only "estimates," and the lender can change them at any time right up to and including the day of closing. Borrowers who email me asking if a particular charge is "reasonable" receive no reply because I know it is a futile exercise.

Don't swing to the opposite extreme and select a lender based on interest rate and total settlement costs including points. This would have become the correct strategy if HUD's proposed reform measures were implemented, because under that proposal, lenders would be held to the total settlement costs they offer borrowers. But the HUD proposals are dead, and under existing conditions, this approach doesn't work.

Lenders today can't be held to their estimates of third party costs, or, for that matter, to estimates of their own costs. They can give you a low-ball estimate to get your business, then raise it after you are safely hooked.

Do select a lender based on rate, points and a guaranteed total of lender fees specified in dollars. Some of the common fees of this type are for processing, tax service, flood certification, underwriting, wire transfer, document preparation, courier, and lender inspection. But what they are called doesn't matter, all that matters is their sum total.

Lenders know what their own fees are, even though they are shown as "estimates" on the GFE. While rates and points won't be guaranteed until you lock the loan, which usually requires completing an application, fixed-dollar fees can be guaranteed at any time because they are not market sensitive.

Do insist on the guarantee. Many retail lenders guarantee their dollar fees now. These include eLoan.com, Indymac.com, HomeLoanCenter.com, Mortgage.com, Mortgage.etrade.com and Countrywide.com. If they can do it, any lender can, and they will if shoppers demand it.

Do close the remaining loophole, which is lender-markups of third party services. Specify that the total of guaranteed lender charges include any markups of third party services, such as appraisals, credit report, pest inspection, or anything else. Make sure it is all in writing.

If you are dealing with a mortgage broker:

Do approach the broker as a service provider who gets paid a fee that is negotiated at the outset. All upfront mortgage brokers operate this way, but many other brokers are willing to as well if borrowers request it. It is reasonably safe to assume that the broker will keep the lender honest on other settlement costs, so your attention can shift to negotiating with the broker. Just make sure that the broker fee includes any payment to the broker from the lender.