Kelly, if you stop paying your mortgage, then you can live in your home rent free for 12 to 24 months, depending on the state you are located within. I have seen lenders wait a year after the first missed payment just to file for foreclosure. Yes, you can live in your house for free for a long time. However, a short sale has many advantages over a foreclosure.
It does less damage to your credit and allows you to buy another home in three years versus the five to seven years after a foreclosure. In addition, you can get some money as an incentive for doing the short sale. If you want the benefits of both, then stay in your home until the foreclosure case has been started. Then, start working on a short sale agent. A short sale can take anywhere from 3 months to even 6-9 months to process.
This will allow you to salvage your credit and live "rent free" for 12 to 24 months. You will be able to wipe out all that upside down debt and move on with your life. Best of all, you will be eligible to buy another home in two to three years once you are back on your feet.