The loan amount refers to the total amount of a loan, line of credit, or other legally binding commitment. For a line of credit, the legally binding commitment is based on the terms of the credit agreement.
If the Bank commits to finance only a phase of development or construction rather than an entire multi-phase tract development project, the loan amount is the legally binding commitment for that phase.
Loan disbursements, should not exceed actual development or construction costs, and the Bank must ensure that the borrower maintains appropriate levels of hard equity throughout the term of the loan.
The value of the real estate collateral for the calculation of the LTV ratio is the appraised “market value.”