First contact the bank and let them know your circumstance and then Find a Realtor that specializes in what is called a short sale.
A deed in-lieu in of foreclosure is the same as a foreclosure on your credit report. There are other options.
The trick now is not to avoid credit damage, but to minimize it.
Also contact an FHA Mortgage specialist in your area and see if you qualify for FHA secure. It is government program designed to help those that were on good standing before an adjustable adjusted.
As for the appraisal being higher than the mortgage balance, well now we know the value of the appraisal.
Again you have options.