Savings and loans, also known as a state or federally chartered savings bank, exist exclusively to hold savings deposits and to make loans. A large number of loans are specifically made for mortgages. Savings and loan institutions got their start in the late 1800s and had a solid reputation until the 1980s when money market funds gave investors higher returns.

Highly regulated in the 1970s, each federally chartered savings bank offered less competitive rates but now offers higher rates on deposits and can borrow money from the federal reserve. Unitary savings institutions, just one type of savings and loans banks, are not subject to some of the restrictions of traditional holding banks. They are controlled by a company or group of companies who can engage in legitimate business activities that traditional banks or savings and loans cannot.

Consider the following when shopping savings and loan institutions:

1. S&Ls rates

2. Customer service

3. Mortgage-specifics

Action Steps
The best contacts and resources to help you get it done

Investigate interest rates offered by savings institutions

Both commercial banks and savings and loans offer investments like mutual funds, CDs and interest bearing checking, with rates varying from lender to lender. If you're only interested in depositing money for savings and not borrowing for a mortgage, factor in rates of all financial institutions, not just savings and loans, to get the best deal. Whether you choose a federally or state chartered S&L, comparing rates via the web is the fastest way to find out what each institution offers.

I recommend: Select your area from the MSN menu to get the highest percentage rates offered today. Bankrate.com lists the rates of more than 50 financial institutions. Prosper boasts one of the highest percentage rates on savings deposits.

Compare services as much as rates when choosing a savings institution

It's your money, so make the most of your investment with S&Ls offering a variety of services as well as those scoring a plus with ease of use and a stable track record. Look for unitary savings institutions offering deposits without fees and minimums. Savings accounts with automatic links to your checking account could make accessing earned interest a snap.

I recommend: TheStreet.com and CreditRiskMonitor feature S&L profiles including services and stability. ING Direct is one of the only savings institutions offering a link to checking accounts.

Request savings and loans bids for mortgage loans

Though S&Ls now offer several services, including issuing credit cards, they still specialize in 30-year mortgage loans, which means they're less likely to sell loans to investors, in addition to offering the widest array of lenders. No matter what, keep in mind that your credit score always factors into your interest rate.

I recommend: Get savings and loans mortgage rates with both ApplyOnTheWeb.com and Bankrate.com. The Federal Reserve Board offers a handy mortgage shopping worksheet so you can keep track of lender information. MyFico calculates the interest rate you would get based on credit score.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Unless you know a savings and loan institution has a solid standing in the industry, www.bbb.org, the Better Business Bureau's website, can help find anything that would make you second guess your choice in a financial institution.