Construction loan with land as downpayment

[Alexandra Scardo]

I need some help understanding how construction loans work when using land as a downpayment. We have several acres that we bought for $100k and still owe 50k on. The land value is, conservatively, $120k. There has not been a recent appraisal. I have spoken to both a mortgage banker and a modular cabin company and explained our situation. They have told me that assuming credit, debt, etc check out fine that I will have enough equity in the land to make the downpayment for the cabin that I want. I chose the cabin based on comps from the last 6 months in my area. The plan is to build and then cash out refi. So can someone explain how this works?