Það er mikilvægt að skilja lánið vel áður en maður skrifar undir.

In this sentence, það is a dummy subject, like it in English It is important to...

So:

• Það er mikilvægt = It is important
• að skilja lánið vel... = to understand the loan well...

Icelandic often uses það er + adjective + að + infinitive clause for statements like:

• Það er gott að lesa. = It is good to read.
• Það er erfitt að skilja þetta. = It is difficult to understand this.

Here, það does not refer to a specific thing. It just fills the subject position.

Because the adjective is being used in a neuter singular form after the impersonal structure það er ...

The adjective mikilvægur means important, and its basic gender forms are:

• mikilvægur — masculine
• mikilvæg — feminine
• mikilvægt — neuter

Since það is neuter, the adjective appears as mikilvægt.

This is very common in Icelandic with expressions like:

• Það er gott. = It is good.
• Það er skrýtið. = It is strange.
• Það er mikilvægt. = It is important.

Yes. Here að is the infinitive marker, equivalent to English to.

• skilja = understand
• að skilja = to understand

So:

• Það er mikilvægt að skilja... = It is important to understand...

Be aware that að can also mean that in other contexts, but here it introduces the infinitive, so it means to.

Because lánið means the loan, while lán means a loan / loan in a more general sense.

The noun is:

• lán = loan

And Icelandic often adds the definite article to the end of the noun:

• lánið = the loan

So the ending -ið here is the definite article for a neuter noun.

That means:

• skilja lán = understand a loan / understand loans
• skilja lánið = understand the loan

It is in the accusative, because it is the direct object of skilja.

The verb skilja takes a direct object, so the thing being understood appears in the accusative.

For the noun lán, the nominative and accusative singular look the same:

• nominative: lán
• accusative: lán

With the definite article:

• nominative definite: lánið
• accusative definite: lánið

So even though the form does not change here, grammatically it is functioning as an accusative object.

Because vel is an adverb, and it modifies the verb skilja.

• vel = well
• góður / góð / gott = good

In English, we also say understand something well, not understand something good.

So:

• skilja lánið vel = understand the loan well

This is a very common pattern:

• tala vel = speak well
• syngja vel = sing well
• kunna eitthvað vel = know something well

Áður en means before in the sense of before something happens.

So:

• áður en maður skrifar undir = before one signs / before you sign

It introduces a subordinate clause with a finite verb.

Compare:

• áður en ég fer = before I go
• áður en hún byrjar = before she starts
• áður en maður skrifar undir = before one signs

English often uses either:

• before you sign
• before signing

Icelandic usually keeps the full clause here.

Literally, maður can mean man, but in this sentence it means something more like:

• one
• you in a general sense
• people

So áður en maður skrifar undir means:

• before one signs
• before you sign
• before a person signs

This use of maður is very common in Icelandic for general statements.

For example:

• Maður veit aldrei. = You never know.
• Þegar maður er þreyttur... = When you are tired... / When one is tired...

It does not specifically mean an adult male here.

Skrifa undir is the normal Icelandic expression for sign.

Literally, it is something like write under, but you should learn it as a set expression:

• skrifa undir = sign

Examples:

• Ég skrifaði undir samninginn. = I signed the contract.
• Hún vill ekki skrifa undir. = She does not want to sign.

In your sentence:

• maður skrifar undir = one signs / you sign

So this is a phrasal expression, not just the ordinary verb skrifa = write.

Yes, this is normal.

In Icelandic, particles in expressions like skrifa undir are often separated from the verb when the verb is finite.

So:

• að skrifa undir = to sign
• maður skrifar undir = one signs

This is similar to how some Germanic languages separate verb particles in certain forms.

You will often see both patterns depending on the form:

• infinitive: skrifa undir
• present tense: skrifar undir
• past tense: skrifaði undir

So the separation here is expected.

Icelandic commonly uses a present-tense verb in clauses like this to express a general action in the future or in a timeless sense.

So:

• áður en maður skrifar undir literally looks like before one signs
• but in natural English it may be translated as before signing or before you sign

This is completely normal. Icelandic often prefers a full clause where English might use an -ing form.

So the present tense here does not mean the action is happening right now; it is just the normal way to express the event.

The word order is very natural Icelandic.

Main clause:

• Það er mikilvægt = It is important

Infinitive clause:

• að skilja lánið vel = to understand the loan well

Subordinate clause after áður en:

• maður skrifar undir = one signs

A useful thing to notice is that the particle undir comes after the finite verb skrifar in the clause.

Also, the sentence builds in a very logical order:

1. It is important
2. to understand the loan well
3. before signing

So even though some details differ from English, the overall structure is quite straightforward.