Stage 4: Closing
With all closing documents submitted, the lender reviews them to make sure all boxes are checked. They then conduct a final review of the complete loan file. This review is different from the deep financial analysis that happened during underwriting. The lender isn’t re-evaluating the deal. They’re just confirming that every condition in the commitment letter has been satisfied, that all documents are complete and consistent, and that the loan file meets USDA program requirements.
During this phase, the lender also coordinates the USDA guarantee sign-off. The guarantee application is submitted to the state USDA Rural Development office, which forwards it to the federal level for final approval. This runs in parallel with the document review and typically doesn’t add extra time to the process.
Once everything checks out, the lender prepares the final loan closing documents and schedules the closing date. How those documents are prepared can depend on the state and use of proceeds. In most eastern states, attorneys are required for closing real estate loans, one representing the lender and one representing the borrower. In most western states, the lender prepares them directly without requiring separate borrower counsel. However, the borrower can involve their business attorney in any state and for any use of proceeds if they wish. The attorney-based process adds cost and time but gives the borrower more input into the document language. The lender-prepared process is faster and less expensive.
Focuses of Analysis
The lender’s review centers on two things:
• Satisfaction of Loan Terms and Conditions
The lender verifies that every condition outlined in the commitment letter has been met – the required insurance is in place, licenses are current, financial statements are up to date, deposits have been paid, and third-party reports have come back within acceptable ranges. Any unresolved condition must be addressed before the loan can close.
• Adherence to USDA Guidelines
Because the loan carries a USDA guarantee, the entire file must comply with the program’s requirements. The lender confirms that the deal structure, documentation, and borrower eligibility all meet USDA standards, then sends it in for the USDA to confirm too.
