I purchased a lot where I want to build my future home. I own the lot outright, it's completely paid for and in my name. When I go in for the construction loan and then the 30 year mortgage loan, how if in any way will owning the land help me? I am probably going to go conventional loan instead of VA to allow a smaller monthly payment. I'll be putting down at least 20%. Will the land only serve as collateral for the down payment? Or am I missing something here? For example, would the bank appraise the land and then possible purchase it from me thus making the amount that I have to come up with smaller? Thanks for any help on this.

Because you own the land, your construction loan should move seamlessly into a 30 year mortgage, all basically the same thing (unless things have changed). The bank wants contact with the builder to make sure their loan is going to be a good investment for them (as well as you). The land isn't collateral; it's just an asset that factors in to how much less you need to borrow. And no, the bank isn't going to buy it from you. It's yours and goes with the house that will be built. Your down payment has to be cash.

Are you building the house yourself or are you going to have a builder come in and do it for you? If you're building it yourself you would arrange for a construction loan. The bank would issue funds in installments as portions of the house are completed.

If a builder is doing it for you then the builder would obtain his own construction loan. You would arrange your contract with the builder so that you pay 20% of the price in installments as portions of the house get completed, and the final payment of 80% would be upon completion and issuance of a Certificate of Occupancy. At the same time that you enter into a contract with the builder you would also go to the bank to apply for a mortgage loan that will be funded by the lender at the time of completion.

The value of the land (unless it is a lot of acreage) is only a small portion of the value of a developed property. The cost of the home is by far the greater portion and will, by far, exceed the value of the lot. So, while, owning the lot free and clear will help you get a mortgage, it won't help that much. It will just mean that you will have greater equity once the house is built.

You haven't said what the lot is valued at. On some of the private mountain lakes in GA, the lot value can easily exceed the house cost. Some lots that cost $400,000 have a $150,000 house on them.