It sounds like you are the seller here.
So is your problem with the buyer or with your lender? It sounds to me that even if the buyer WAS ready to close last week that YOU weren't ready because you were arguing about the payoff with your lender.
Another question is, what does the purchase agreement say? Has the window to close come and gone or was it extended? Also, does it list any provisions for what happens when that date passes? That piece of paper could be an indication of whether you "technically" can cancel.
I don't have all the details, but in my opinion you shouldn't punish the buyers because of an argument with your lender. They have moved forward in this transaction in good faith and have come a long way to get to closing. If you cancel, you're still going to need to pay your lender and if you want to sell you are going to have to start back at square one. Are you willing to risk that, along with pi$$ing off some buyers, their agent, and probably yours??
If none of that bothers you, then by all means go for it. I don't have a dog in this fight, but my two cents are that you want to sell (obviously, otherwise why would you list the home?) and you have a willing buyer who is ready to close, so what good reason is there to back out at this point? Does doing so accomplish anything?
I would think about that and consult with your Realtor.
Best of luck!