way underwater and dont want the house anymore

[Joel Fraser]

Well me and my fiance bought a house in may of 06 for 244000 and put nothing down on a stated income loan of 80/20. The 80 is now with Chase for 163000 and the 20 is now with litton loan for 61000. The 80 loan is due to reset may of 09 and the payment is going from 1185 to 1600 or so. the 20 i believe is fixed at 600. the first loan also has a ballon payment at the end of 30 years for 183000! The houses in my neighborhood are listed but not really selling at about 100000 to about 140000. in the 2 years we have been here we have really outgrown this house and dont really like the neighborhood for our kids. How do we get out of this? If we are approved for a short sale do we still continue our payments? is foreclosure an easier process? i have heard of people living in thier homes for almost a year without paying! We would really like to get out of this house and rent for a few years and save some money, we are not behind on our mortgage but spend every penny we earn every month, any suggestions?