For the longest time I was afraid of anything with an ARM. You know, an adjustable-rate mortgage.

I'm a fixed kind of woman. That's how I was raised -- to trust predictability and shun uncertainty.

As you may know, with a fixed-rate mortgage, the interest rate stays the same for the life of the loan. But with an ARM, the interest rate can move up or down, usually in relation to an index.

ARMs don't scare me anymore. I understand how they work and think this mortgage product can be a good choice for many people. But the trick is, you have to understand how your particular ARM works and the risks you're taking.

Unfortunately, a new survey commissioned by the Consumer Federation of America (CFA) suggests that far too many low-income people and minorities don't understand ARMs.

The CFA survey found that 23 percent of whites prefer ARMs, compared with 37 percent of Hispanics and 31 percent of African Americans. It found that 33 percent of respondents with annual incomes less than $25,000 said they prefer ARMs to fixed-rate mortgages, compared with 20 percent of those earning more than $50,000.

Here's the problem. Those most likely to prefer ARMs (lower-income, young and minority consumers) are also the most likely to misunderstand the interest-rate risks associated with them.

In the survey released this week, less than half of those favoring ARMs could articulate why this type of mortgage made sense. They didn't know, for example, that an ARM might be appropriate if you don't plan to keep the loan for long or that it's risky if the low initial payment is all you can afford long-term.

"Given the high probability of interest-rate increases, an adjustable-rate loan made to a family which can barely afford the initial monthly payments represents a ticking time bomb," said CFA Executive Director Stephen Brobeck.

Brobeck said he's disturbed that some lenders are aggressively and "irresponsibly" marketing ARMs to potential buyers, regardless of income or assets.

Doug Duncan, chief economist of the Mortgage Bankers Association, disagrees. "The survey sort of implies that the lender wants to give the borrower a loan that gets them in trouble, and this is not true," Duncan said.

Look, it's obvious that young people and consumers with limited incomes choose ARMs because they're more affordable.

"They have lower interest rates, which means the payments are lower," says Heather McElrath of the American Bankers Association.

An ARM can also help a home buyer qualify for a larger loan. And home prices have been rising. The national median price for an existing home was $191,800 in June, up 9.6 percent from June 2003 when the median was $175,000, according to the National Association of Realtors.

Homeownership is one of the biggest factors in creating wealth. However, black and Hispanic consumers lag significantly behind whites in homeownership. For the first quarter of 2004, the homeownership rate for non-Hispanic whites was 75.5 percent compared with 47.3 percent for Hispanics or Latinos and 49.3 percent for blacks.

While I understand Brobeck's concern, I don't think for a minute that lenders will curtail their marketing of ARMs to low-income and minority consumers. The housing market is too hot. This product is too popular.

I do agree with Brobeck that lenders should show people worst-case scenarios based on the particulars of their ARM. People need to see in big, bold print what their payments would be if interest rates continue to climb and their mortgage payments grow along with them.

While some ARMs cap interest increases at 2 percentage points annually and 5 percentage points for the life of the mortgage, others do not. Even with caps, a borrower's annual mortgage payments could increase by several thousand dollars in a year, and by many thousands over five years, the CFA points out.

Before you sign up for an ARM, read the Federal Reserve Board and Office of Thrift Supervision booklet on adjustable-rate mortgages (which can be found at www.federalreserve.gov/pubs/brochures/arms/arms.pdf). Here are some important questions you need to ask:

* Is my income likely to rise enough to cover higher mortgage payments if interest rates go up?

* Will I be taking on other sizable debts, such as a loan for a car or school tuition, in the near future?

* How long do I plan to own this home? (If you plan to sell soon, rising interest rates may not pose the problem they might if you own the house for a long time.)

* Can my payments increase even if interest rates generally do not increase? In other words, find out if the interest rate on your ARM can increase even if other rates stay the same -- for instance, if your low rate is actually a "teaser" rate.

I think getting an ARM is much like buying a car. If you focus solely on getting the lowest possible monthly payment, you could be taken for a ride.

Researcher Lorraine Denis-Cooper contributed to this column.

Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to singletarym@washpost.com. Comments and questions are welcome, but please note that they may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.