If the index rate moves up, so does your mortgage rate in most circumstances. In that case, you will probably have to make higher monthly payments. On the other hand, if the index rate goes down, your monthly payment may go down. The amount of the margin can differ among lenders, but it is usually constant over the life of the loan. In comparing ARMs, look at both the index and margin for each plan.
Some indexes have higher average values, but they are usually used with lower margins.
Interest rate caps come in two forms. By law, all ARMs must have an overall cap. Many also have a periodic interest rate cap. However, some ARMs have more frequent interest and payment changes. The period between one rate change and the next is called the adjustment period.