Before we talk about short sales as a solution to your underwater mortgage, we want to give you a quick primer about the alternatives. That way you can compare short selling to the rest of the options you have when you're faced with an underwater mortgage. Now for the purposes of this article, we're assuming that you can't afford to pay the monthly payment on your underwater mortgage anymore. That's the situation that most people who find our website find themselves in. With that said, here are some of the other options: Applying for a loan modification can certainly delay or draw out a foreclosure, but fewer than 3% of homeowners actually qualify. And two of the available options will end up with you eventually paying more for your mortgage than you originally signed up for! But, if you can get the modification and when you do the math it makes sense to you, go for it.

You could give your mortgage lender a "deed in lieu." This means you hand over the deed and the keys, and you walk away from the house. This is not a good option! Why? Because most mortgage lenders will hound you relentlessly about paying the difference between what they can sell the house for and the total amount of your mortgage. And because mortgage lenders aren't set up to be real estate offices, they will sell your house for pennies on the dollar just to get rid of it. The next option is foreclosure. With foreclosure, you can keep living in your house mortgage-payment free until you get an eviction notice. You'll have to manage your way through a few years of less-than-stellar credit, but Kristin and I have been through this option, and it's worked out well for us so far. You may also have to worry about your lender coming after you for the difference between the eventual foreclosure sale price and the amount you owe on your mortgage.

And, voila! We had the recession and near-financial collapse of 2009. Guess what else happened? Suddenly there was a glut of houses on the market from all the foreclosures that happened when the people who got those bad loans couldn't pay them. What happens when supply goes way up? Demand falls way down-and so do property values. Add 10% (or 17%, if you understand how the government isn't showing you accurate unemployment numbers) unemployment into the mix, and what we have on our hands now is a mess where a quarter of US homeowners have underwater mortgages-and one out of ten of them owe 25% more than their houses are worth!

Clearly this is a tough situation for homeowners who need to decide whether it makes more sense to keep paying on their underwater mortgage or to strategically default, just as any business does when it's faced with an underwater investment. It's a hard situation for neighborhoods when houses are getting boarded up and trashed because of foreclosures-which just drags property values down more. And it's hard for city governments as they're losing all of that tax revenue from property taxes. But if you're dealing with an underwater mortgage, the first people you need to look out for are yourself and your family. If you decide to walk away and strategically default on your mortgage, you could end up staying in your house rent-free for possibly up to 2 years.

Walk Away: Before trying this move, it is important to check with a lawyer. Some states have laws where property owners can walk away from their fiduciary responsibility and turn over the house keys to appropriate lender. The process requires contacting your bank and presenting them with the deed-in-lieu. If they accept the move you can stop making house payments and live there until the bank tells you otherwise. Banks actually may approve this move as it could save them the time and money associated with the foreclosure process.

Learn more about Obama Mortgage Relief Plan Qualifications.