When to move on from your underwater mortgage

What do you do when the home you rent out is starting to cause you more trouble than it's worth?

That's a problem facing Alayne, a program coordinator who bought a home five years ago that she rents out (while she and her husband live in another home). But after a bad experience with the rental home's first residents, repairs took their toll on her finances. Now the house is underwater -- she owes more on her mortgage than the home is worth.

Alayne says the home she bought when she was single is slowly draining her and her husband's savings and income. The two have since bought a new house together.

"We are not able to get enough in rent to cover the mortgage [on the rental home] and the mortgage is going up," she says. "We're looking at maybe a $200-300 drain each month."

Should she short sell the house?

"With a short sale, it's going to trash your credit as much as a foreclosure," says personal finance expert Liz Weston. "What it does do for you is that you're in the penalty box with mortgage lenders for a shorter period of time."

Click play on the audio player above to hear more advice.