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The mortgage interest rate is the price you pay for borrowing the money to buy your home. The interest rate is an annual rate but is calculated and applied as a monthly rate. The lower the interest rate, the less you will have to pay.
For a fixed rate mortgage, to find the monthly amount of your payment that is paid in interest, take your interest rate and divide by twelve. As an example:
You will wind up paying thousands in interest by the end of the mortgage. At the closing, the bank or mortgage company should give you an amortized payment schedule showing you how much you will pay in interest over the duration of the mortgage. This amount could be a shock to a first time homebuyer, but that's the way it is.
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