Frequently Asked Questions

 

If you have a question about Smith Rothchild, check here first. Many common questions are covered here.

 

1. How does the process work?
A.) Complete a Rehab Loan application (If you have a contract on a property, submit a copy of your contract and earnest)
B.) Your application is reviewed
C.) Appraisal is ordered
D.) After all of your personal documents are collected your file is submitted to processing for deal structuring and review

2. Are there any out-of-pocket fees?
Yes, the appraisal and inspection fees. The appraisal fee varies by project however the inspection fee is set at $75. These fees must be paid on site at the appraisal and inspection in cash or by check. The appraisers and inspectors we work with are from a third-party and are not employed by Smith Rothchild in any official capacity. They must be paid separately, and upfront. Please note that these fees are non-refundable, regardless if the deal closes.

3. What is the Reserve Requirement?
The reserve requirement depends on your down payment qualification and the size of the project. Reserves can be shown in the form of a checking or savings account, 401k, IRA, line of credit, CD’s, etc. Underwriting requires that you show a minimum of 20% of the total loan amount in reserves – which means that you need to show the following:
- Down payment
- Plus 25% of the Rehab amount in liquid reserves
- Additional reserves amounting to no less than 10% of the loan amount

4. What interest rate and fees am I charged?
Our interest rate is fixed (payments financed into loan) and the current rate can be found on our lending guidelines. Origination fees are determined based on the following: total loan amount, number of paid off deals you have completed with SR, your credit score, the reserves you show and your experience as a rehabber.

5. I have a free-and-clear property. Can I use it in lieu of a Down Payment?
Yes. If you own a property free-and-clear, you may use it in place of a Down Payment – provided it is not the property you intend to rehab. We can cross-collateralize the free-and-clear property for your rehab of another property.

6. What do I need to bring to the Closing Table?
You will need to bring a cashier’s check made out to yourself for your down payment, attorney fees and insurance if paid on the HUD. The down payment is typically between 10%-15% of the Purchase Price. You will be given an estimate of your down payment prior to closing.

7. Is Insurance required?
Yes. All clients are required to purchase Builder’s Risk and Liability insurance for newly funded loans through our master property insurance program. Insurance is provided by Hanover Insurance Group.

8. What happens after Closing?
You begin the work on your property! Once you are a day or two away from completing a phase, contact your Appraiser to schedule your inspection. Once the inspection has been completed and the Lien Waiver has been submitted to our Client Services Department, you can expect to receive your reimbursement within 24-48 hours.

9. How is my repair money released?
Click here to see our Draw Process and Draw FAQ section

10. Do we have to go through the entire process with collecting all these documents when I do my second loan?
Smith Rothchild keeps your documents on file for 6 months. You will only need to update your documents for every subsequent deal.