It sounds as though your situation would be perfect for a home-equity line of credit (HELOC) to pay off any debt. And there's rarely a penalty for paying a HELOC off.
Also, I agree, get a HELOC, they work like a credit card. You even get checks. When you pay it off, it stays open to charge on it again and again if you need to pay off more debt later or do home improvements.
Elvis has the answer I would give. Just pay it off at closing. (although Elvis has just left the building)
The person to ask is your lender.
But feel free to ask me other questions about Real Estate in Madison Wi