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$497,466. Choose a 15-year loan at 3 percent instead, and you'll save more than $120,000.

If you have less than 20 percent down, you have the choice of a Federal Housing Administration mortgage or a conventional mortgage with private mortgage insurance. FHA loans allow down payments as low as 3.5 percent but carry an upfront fee of 1.5 percent of the mortgage amount, plus an annual fee of 1.15 percent, according to Keith Gumbinger of HSH.com, a Pompton Plains company that tracks the mortgage market.

Private mortgage insurance is cheaper, typically costing less than 1 percent a year and varies according to the borrower's credit score and down payment. Another advantage of PMI is that it is canceled eventually -- once the homeowner has 20 percent equity in the property. But to get a conventional loan with PMI, you'll probably need to have 10 percent down and a better credit score than the FHA requires, lenders say.

3. SHOP AROUND: Check with several lenders, not just the one recommended by your real estate agent. Compare interest rates and closing costs like fees for the application, appraisals and so on. These costs generally run around 2 percent of the loan amount, according to Gumbinger.

To check on the lender's reputation, call the state Department of Banking and Insurance at 800-446-7467, though the department regulates only state-chartered, not federally chartered, banks.

There are fewer "bad actors" in the market to watch out for, after the shakeout of the mortgage industry during the housing bust, Gumbinger said.

Michael Moskowitz, president of Equity Now, a mortgage lender, encourages home buyers to ask mortgage companies for the names of previous customers and check on their experience. "You need to make sure you're dealing with someone reputable," he said.

4. GET A PREAPPROVAL: Lenders will give prequalification letters - - informal estimates of how much house you can afford. But you should go further and get a preapproval letter, which is a tentative commitment from a lender. To get one, you'll have to show the lender documentation of your income, assets and debts. Though a preapproval is not binding on either the lender or the home buyer, it's a way of showing sellers and real estate agents that you're a serious buyer.

A preapproval letter and a copy of your credit score -- assuming it's 740 or above -- can be a strong argument in your favor if you're competing with another buyer for a home, Becker said. Sellers sometimes accept lower offers from more qualified buyers who are able to show they can actually close on the deal.

5. BE PREPARED TO SHOW LOTS OF PAPERWORK: Fannie Mae and Freddie Mac, the government entities that guarantee loans, are forcing lenders to demand much more documentation these days, including pay stubs, tax returns and bank statements -- "anything that can prove you are the borrower you claim you are," Gumbinger said. And they will ask for fresh documents, like pay stubs, just before the closing, to make sure nothing has changed.

"We've got to be able to touch, feel and see the source of income to repay the loan," Engel, of Valley National, said.

Because of these tighter documentation standards, Gratalo recommends that you start saving pay stubs, bank statements, canceled rent checks and other paperwork several months before you even start shopping for a house or a mortgage.

6. CONSIDER LOCKING IT IN: Many lenders will offer borrowers the chance to lock in their mortgage rate free for up to 45 days, and some will lock in for up to 60 days, either free or for a small fee. Gumbinger advises buyers to seriously consider locking in the rate, especially now, since there's not much room for rates to fall.

"The odds don't favor significantly lower interest rates," he said. He recommends a 60-day lock-in, which should be long enough for most closings.

7. DON'T MESS IT UP AT THE LAST MINUTE: Once you have your loan approval and make an offer on a home, don't throw the whole deal into doubt by making moves that will change your credit profile. Don't quit your job or take out a big car loan, for example. Don't apply for a new credit card, even if the merchant offers you 10 percent off if you do.

The lender will recheck your employment status and credit profile just before the closing. Realtors and lenders say closings are routinely delayed when a buyer decides to lease a new car or apply for a new credit card after being approved for a mortgage.