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Tel:  703.879.3568
Cell: 703.485.6136
franksharp@WatershedLoans.com

 

 

Frequently Asked Questions

Click on a question below to be directed to the answer:

1. Can I e-mail or fax my application to become an approved borrower?

2. Can I charge my credit card for the application fee?


3. Can a sole proprietor get a loan?


4. Can a corporation get a loan?


5. Can a partnership get a rehab loan?


6. Can an LLC get a rehab loan?


7. Can a trust get a rehab loan?


8. How much down payment do I need to have at closing?


9. When is my first payment after closing?

10. Do you charge monthly interest on the full loan amount from the loan date?

11. Is there a minimum interest charge?


12. What if I want to use my own money for the rehab?


13. How long does it take to get a draw payment?


14. What if I cancel an inspection?


15. Why do you include the full labor cost in the Rehab Reserve when I am going to do the work, or my friends or relatives are going to help out and work for free?


16. Will you accept inspection reports from other inspectors?


17. I already have an appraisal on the house, why do you need another one by your designated appraisal firm?


18. Do you allow the monthly interest payments to be deferred to the closing of the sale or refinancing of the house?


19. Do you require a survey?


20. Do you lend on a property in a flood zone?



21. Do you lend money at the foreclosure auction?

22. Do you do refinances?


23. Can I put a tenant in the house?


24. Can anyone occupy the house?


25. Will you make a hard money loan to fix up a house if we plan on living in it?


26. Do you make new home construction loans?


27. Do you arrange for long-term mortgage loans?


28. Do you help borrowers find houses?

1. Can I e-mail or fax my application to become an approved borrower?
Yes. (Back to Top)

2. Can I charge my credit card for the application fee?
Yes. You can complete our Card Authorization, or send a $25 check by mail. (Back to Top)

3. Can a sole proprietor get a loan?
Yes. You will need to furnish us with a copy of your social security card and drivers license. Title can’t be held under the name of a DBA because it is not a legal entity. (Back to Top)

4. Can a corporation get a loan?
Yes. The president of the corporation must make loan application and be the guarantor for the loan. You will need to provide Watershed with the corporation’s Articles of Incorporation and Certificate of Incorporation and, if applicable, an Assumed Name Certificate filed with the Secretary of State if you are operating the corporation using a name other than the legal name of the corporation. (Back to Top)

5. Can a partnership get a rehab loan?
Yes. The partner who will be dealing with Watershed must make loan application and be the loan guarantor. You will need to give Watershed a copy of the partnership agreement. (Back to Top)

6. Can an LLC get a rehab loan?
Yes. The member or manager who will be dealing with Watershed must make loan application and be the loan guarantor. You will need to provide Watershed with the Articles of Organization and Certificate of Organization. (Back to Top)

7. Can a trust get a rehab loan?
Yes. The beneficiary of the trust must make loan application and be the guarantor for the loan. You will need to provide Watershed with the executed Trust Agreement. (Back to Top)

8. How much down payment do I need to have at closing?
Borrowers must bring at least 5% of the loan amount as cash in the deal at closing. (Back to Top)

9. When is my first payment after closing?
If you close between the 1st and 19th of the month, your first interest payment will be due on the 1st day of the following month. If you close between the 20th and end of the month, preliminary interest for that month will be collected at closing and your first payment will be due on the 1st day of the 2nd month following closing. (Back to Top)

10. Do you charge monthly interest on the full loan amount from the loan date?
No. We only charge interest on loan amounts that have been disbursed to you or on your behalf (i.e. you start paying interest on draw payments when the money is wired to your bank account). Some lenders charge interest on the loan amount even if they hold back the rehab funds. (Back to Top)

11. Is there a minimum interest charge?
No. You only pay interest from the date loan funds are advanced to you or paid on your behalf to the date you repay the loan. (Back to Top)

12. What if I want to use my own money for the rehab?
You may use your own money for the rehab work, however, the lender will still holdback the rehab funds at closing as determined by the inspector. If you use your own money and do not take draws, you will only pay interest on the initial advancement. (Back to Top)

13. How long does it take to get a draw payment?
We wire transfer draw payments to your bank the day after the draw inspection. (Back to Top)

14. What if I cancel an inspection?
A draw inspection fee will be charged if an inspection appointment is canceled after 5:00pm on the day prior to the inspection appointment, or if the inspector does not have access to the interior of the house to do a draw inspection. (Back to Top)

15. Why do you include the full labor cost in the Rehab Reserve when I am going to do the work, or my friends or relatives are going to help out and work for free?
If something happens to you, and we have to foreclose on the property, you and your
friends or relatives won’t want to work for Watershed for free to finish the job. (Back to Top)

16. Will you accept rehab estimates from other inspectors?
No. Some inspectors low ball the cost of the rehab (intentionally or unintentionally). We feel strongly that you should know what it will cost to bring the property to a good, marketable condition at contractor pricing so you can make an informed business decision whether to buy the property. (Back to Top)

17. I already have an appraisal on the house, why do you need another one by your designated appraisal firm?
It is one of Watershed’s ways of protecting against fraud. (Back to Top)

18. Do you allow the monthly interest payments to be deferred to the closing of the sale or refinancing of the house?
No. (Back to Top)

19. Do you require a survey?
Normally no. If, however, the property legal description is in metes and bounds or there is obvious encroachment issues resulting from additions or buildings erected on the property, we will require you to obtain a survey. (Back to Top)

20. Do you lend on a property in a flood zone?
Yes, but we require a flood insurance policy. (Back to Top)

21. Do you lend money at the foreclosure auction?
No, but we may be able to refinance the property you purchase at the auction. We do lend on pre-foreclosure purchases and purchases from the lender who has foreclosed on the property. (Back to Top)

22. Do you do refinances?
We handle refinances on a case-by-case basis. (Back to Top)

23. Can I put a tenant in the house?
Not while our loan is in force. We’ve seen enough tenants trash houses that have been all fixed up, which is not good for you or us. Accordingly, putting a tenant in the house is a default under the deed of trust. (Back to Top)

24. Can anyone occupy the house?
Not until our loan is paid off. Doing so is a default under the deed of trust. (Back to Top)

25. Will you make a hard money loan to fix up a house if we plan on living in it?
No. We only lend to real estate investors who plan on selling their houses or refinancing them as rental property. ((Back to Top)

26. Do you make new home construction loans?
Yes, but only to experienced builders who are building spec houses. We don’t make construction loans to real estate investors who are relying on a general contractor to build the house. (Back to Top)

27. Do you arrange for long-term mortgage loans?
No. There is a potential conflict of interest in handling both short-term loans and
long-term loans. (Back to Top)

28. Do you help borrowers find houses?
Watershed does not have a list of houses for sale. However, the material describing many ways to find motivated sellers is contained under the heading “Educational Information”. You can download this material in PDF format. (Back to Top)

 

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