"If Buyer, having applied for the loan specified above, in unable to obtain such loan commitment and serves written notice to Seller within the time specified, this Contract shall be null and void."
So, if the low appraisal causes your lender to not issue the loan, and you notify them within the contingency period, then you should be able to walk away with no penalties and your 5% back.
But you should consult your RE attorney, agent and the contract.
your lawyer knows your contract and your circumstances better than anyone else. ask him/her !
Possibly. The attorney that I use for all of my closings always puts in their initial letter to the seller's attorney that the home must appraise for at least the purchase price, thus protecting my client's for situations like this. Otherwise, if all contingencies have been met, you risk losing your earnest money.