You really need to consider how long you can continue paying into the mortgage from your savings and estimating how long it will take to capture enough equity on your home to break even. Having the 25K in savings may have the lender wanting some to pay down the mortgage depending on what offer is submitted via a short sale. Lenders have been approving a short sales even though a person is not late. Banks will look at your hardship and would most likely accept 90% of the current market value. You may want to talk to a qualified real estate agent experienced in short sales to see how much yor home can be sold for. Maybe you can do a short sale and push out only a little money to get rid of the home. You definitely need to speak with someone to see if you are a good candidate for a short sale. I would say go with trying a short sale to see if it solves your problem. Once you go through with it, at least it will provide you with real options to get rid of the property.