The amount of mortgage interest that has been earned but not yet paid. Mortgages are paid in arrears, which means that the interest due on the balance accrues before a payment is made. Each payment covers the accrued interest first, and anything left is applied toward the principal balance.
For example, a $200,000 mortgage with a five percent interest rate accrues $27.77 interest per day. When the borrower makes a mortgage payment, the accrued interest is zeroed out. When a mortgage is refinanced or a property is sold, the mortgage payoff amount includes the remaining balance plus accrued interest.