Drinking water while you lose weight helps keep the skin firm, instead of sagging. The more hydrated your skin is, the more likely it'll be to "bounce back into shape".
Sadly, if you drop a lot of weight in a short amount of time, you will get saggy skin. It'll correct itself over time, but that time could be years.
But if you're not losing more than 6-7 lbs or so a month, it shouldn't be a problem. I'd still drink the water anyway, good for you.
(As for your belly: it's possible to be skinny just about everywhere except for your belly: I once knew a construction guy who was skinny as a rail, but had a beer belly that would slouch over his waistband. Nothing to do about it except lose more weight.)
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