(Like you've already heard, distance to host matters and there's really no guarantee on the quality of connect you'll be given, since youre likely traversing many networks on your way to game host. You can be SURE you'll get bad and unstable ping matches occationally, that's just how it is. Also, low kill times in a game doesn't really help either!)
Apart from checking you've port forwarded and all the regular things everybody told you, also check if you have many devices in your household that also simultaneously use your connection as you play. This can really hamper a gaming session.
Is you dad downloading porn as you play? Is your sister on You tube streaming like hell? Are all your smart phones and tablets constantly online with your home connection per default? (these devices communicates A LOT just lying there if you haven't configured them not to!). Know that every host your router has to serve as you play will probably have an impact on line quality. Let you Xbox be boss!
OK that's all bye!
PS I would still like 3arch to overlook lag compensation algorithms and tuning, because if you have many fluctuating connections, and an algorithm that doesn't take the proper scenarios into account, then it could actually worsen things it should fix. Hear me 3arch??
I know it's a bit long, but watch this video.
The chap has proven that he had a perfectly acceptable ping TO THE HOST Console during games while he was lagging.
It's a shame, but it does prove that it's not the network causing the lag, it's the GAME.
Up to 15 mins he is describing how he did the tests, after 15 mins is the results.