Interest rates are fees imposed by lenders for loaning you the money you need to purchase a home. The larger your interest rate is, the more you'll end up paying over the life of your loan in addition to your principal borrowed amount.
To better understand interest, consider this brief example:
If you made a $100.00 purchase on borrowed money and your lender said that they will collect a 10% interest rate on your borrowed funds. Not only would you need to pay back the $100.00, you would also have to pay back an additional $10.00 (10%).
The same goes for homes. If you borrow $100,000 to purchase a home at a 4% interest rate, you'll make monthly payments on your principal due plus the 4% interest that is attached to your loan balance.
The longer your loan term, the longer you'll pay interest on your balance due, and the more expensive your house will be.