Relax, You already have a friend in the neighborhood. Compared to fixed rate mortgages, ARMs offer a lower interest rate to start, so your monthly payments are generally lower.
Every lender then adds a set margin to that index.
Your payments could go up or down, depending on the economy and it's resulting indicators. Be sure to ask what they are. These limit how much your rate can go up or down each time it is adjusted, and how much it can go up or down over the life of the loan. Are confident your income will increase. Plan on moving within seven years of buying your home.