Our mortgage manager just called and they have a loan where the borrower already owns the land. They are doing a construction loan and there is sufficient equity in the land to pay off other obligations. The manager wants to do this loan as a refi instead of a purchase because of the land.
I say it is still a purchase because of the construction of the primary residence. I looked through TIL and the commentary. I'm not sure where to find my answer.

I'm confused. Is this a construction loan (the proceeds are used to build a home) or are the proceeds used to pay off other obligations?

Second, if you have a lien on the land, won't you have a lien on the home on that land? You say there is "sufficient equity in the land", but you won't just have the land as collateral. You've have a home equity loan, at a minimum.

Please reply to these questions and I'll see if I (or maybe someone else) can provide further guidance.