The amount of mortgage interest that has been earned but not yet paid.
More On Accrued Interest
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.