Screeching to a Grinding Halt

So, I've hit a roadblock on my way to homeownership. The last hurtle I had to overcome took place earlier this week - the appraisal. Normally, this step is really just a formality required by your lender to verify that you're not paying an outlandish sum of money for a worthless shack in a demilitarized zone. The assumption is that the seller had his house appraised prior to putting it on the market and he's not asking for too much more than its value. So, I had no worries about the appraisal - I completely forgot it was to take place on Monday. I forgot about it until Suzy called me Tuesday afternoon with some bad news.

Yeah, the house was appraised for a HUGE amount less than what I had agreed to pay for it. My lender immediately rejected my loan application, and I was left wondering what the hell just happened?? There are a few ways such a situation can be worked out: 1) the seller can just lower the price of the house to the appraised value, and we all continue on our merry way, 2) the seller can lower the price of the house, but refuse to pay any incentives like closing costs or inspection repairs, 3) the seller refuses to lower the price and I can either walk away or find enough money to make up the difference between my loan amount and the asking price. Well, #1 was extremely unlikely, and #3 would result in me walking away because I don't have that kind of money just sitting around. Luckily, on Wednesday morning the seller decided to go with #2 - good news and bad news. The overall cost of the house is now less (yay for lower mortgage payments and property taxes!) but I have to come up with the cash to cover the closing costs and repairs.

So, that's where we are now - looking for money. I have a feeling a really awkward call to the parents is in my near future...