What price security? The way mortgage lenders tell it: A few hundred dollars.

That's the typical cost of lock-and-float rate programs offered by companies today. These programs allow borrowers to lock in the current rate for a specified period, while also letting them "float" the rate down if market conditions improve before closing.

Insurance for borrowers
"It makes good sense for construction loans, or loans that typically take a long time to close," says Christiaan Lidstrom, a manager with Wells Fargo & Co.'s mortgage division. "In seven months when I close, who knows where (the rate) is going to be? It might even be better, but I still locked in and I've given myself the opportunity to float this down.

"It gives the borrower some insurance."

The lock-in dilemma invariably comes up during periods of interest rate uncertainty. People want to get the best rate available, but don't know whether it's the one out there now or the one waiting just over the horizon.

Choice of programs
To protect against such uncertainty, borrowers can choose programs with 90-, 180- or even 360-day lock-and-float periods. They will pay anywhere from a quarter of a point, or 0.25 percent of their loan amount, on up to a full point for the privilege. Part of that fee may be credited toward their closing costs. Some programs prevent any upward move in rates, while others offer varying amounts of protection, depending on how much a borrower wants to spend.

Who should buy a lock-and-float?
When it comes to deciding whether a lock-and-float program makes financial sense, experts say people should consider the trend in interest rates and whether their sanity is worth a few bucks.

They may also want to consider the length of time before closing, and whether any closing is likely to be delayed. With new construction, builders often run into unexpected delays. Some borrowers may want to get a lock-and-float loan in order to protect against the risk that rates will fall before the roof can be raised.

"Longer-term locking may be for the type of person that's in a 90- to 180-day closing situation, who's pretty comfortable their loan is going to close, but they build in a little bit of cushion for the fact it may not close exactly when the builder says it's going to close," says Robert Bakerian, vice president of secondary marketing at American Federal Mortgage Corp. of Flanders, N.J.

Divining the interest rate trend
People trying to divine the direction of interest rates face a tougher decision. If the direction is uncertain, with no consensus on which way they're liable to go, most borrowers are better off just locking in on the best rate they can find -- and saving the cost of the lock-and-float option.

"If you have to pay a whole point upfront, you don't get any of that back and your interest is capped at three-quarters above market, to me you're hedging your bet with so much money," Bakerian says. "It's like buying an insurance policy, but your insurance policy is very expensive."

On the other hand, people who can't stomach a rate increase of even a few percentage points may want to buy some piece of mind.