Yes you can and should. However, be careful before you do. Ask your mortgage professional if you are working with one, or give me a call for advice. Some lenders don't allow it to be paid of at closing. So I recommend you proceed as follows:
- First make sure you would have enough funds to payoff the car and still have enough for down payment, closing costs, etc.
- Once you pay it off and depending how soon you want to buy a property, you may have to do a rapid rescoring so that your credit report is updated. That's the process by which your credit reporting company submits evidence of the payoff and they immediately update your credit report. It takes 3-5 days for that. There is a fee involved for rapid rescoring. Either that or you wait about 30-60 days and hope they have reported that account as paid for.
- Make sure you have other open and active tradelines(like other credit card accounts) in your credit report. However, even if you don't, some lenders allow to add non-traditional accounts to your credit report such as rent history, insurance payment history, cell phone payment history, etc. Not all lenders allow that however..
- An analysis should also be done to make sure your score will not be affected after paying off the car.
Please consult your mortgage professional before proceeding. Or call me if you like for a free consultation.
Florida Mortgage Coach