I'm just not understanding this....

[Brandon Nappi]

Thank you all for your previous answers, maybe I need to ask the question a different way to help me understand?  

I own a parcel of land = $150,000

Construction costs will be $350,000 for a single family home

When this construction loan is converted to a permanent mortgage, how does the bank determine my loan balance?   I plan on using the land as my downpayment.    

Does the permanent mortgage pay off the construction loan and then my perm loan is based off of the appraised value (lot + improvements) or is it based off of construction costs + lot?

Or now that construction is complete and I own the land, do I just refi to get a better interest rate on the construction loan?  

I cannot wrap my head around this.....

Thanks!