By Tara-Nicholle Nelson, Tuesday, January 3, 2012.

Inman News®

What seemed like a housing market downturn is now nearly  universally seen as the new normal. Accordingly, many homeowners are taking a  tough look at their mortgage situations in this stark light.

This New Year’s season, I’ve received a massive influx of  reader questions — quasi-challenges, really — asking me why they shouldn’t  just walk away from their underwater homes and upside-down mortgages.

If you’ve read my work at all, you’ll know that I almost  never give an absolute answer to such an important question. The decision  whether to walk away from your home is too big and too personal, and there are  simply too many variables — legal, financial, credit, tax, personal, lifestyle,  family, etc. — at play for me to give a glib black-and-white answer.

If you’re  trying to make this decision now, it absolutely behooves you to consult with a  reputable real estate broker, mortgage broker, local attorney and local tax  professional — at minimum.

However, I’ve also noticed that most upside-down homeowners  don’t really want to default on their mortgages. If you count yourself in that  number, I thought I’d take the opportunity this New Year’s week to encourage  you to harness the renewed energy and commitment that comes along this time of  year and provide you with some direction for it, in the vein of avoiding  foreclosure if you decide that is the right path for you.

Here are six alternatives to walking away, some more obvious, some  less, but all underutilized, from my vantage point.

1. Get rid of your  credit card debt. Again, this might seem obvious, but I’ve encountered a  number of people who say they can’t afford their mortgage payments who actually  could afford them if they dealt with their credit card and other debt.

Call your creditors and make an effort to settle your debt; many  will take a lump sum payment much lower than your balance. While this might  have tax and credit score implications, it might also help you keep your house.  Or work through steps No. 2 and No. 3, below, to just eliminate those balances,  by any means necessary.

2. Get a second job.  This seems obvious, too, but I believe it’s simply not done nearly as often as  it should be, mostly out of pride and emotional defeatism.

You already work 40 hours a week. You’re already tired. But  you know what? I know MBAs who got into a bad debt situation and are climbing  their way out with high-end, table-waiting tips. It won’t last forever and,  again, could be very much worth it.

If you’re not up for this sort of hustle,  and you’re a white-collar professional, there are tons of consulting or  contract gigs out there to be had, which can help you catch up on missed  mortgage payments or bring down your debt.

3. Start a side  business. Sites like Etsy, TaskRabbit and elance allow people to monetize their spare  time, quirky hobbies and special skills. I know a journalist who nearly matches  her day-job income dog-sitting while she writes.

4. Rent a room — or  two — out. Put your man cave on Trulia or Craigslist for rent. If you  can’t stomach the idea of a permanent roommate, check out Airbnb and see if you can generate some extra  cash renting out your rooms to those visiting for short periods of time.

5. Apply for  everything. Decide right now to simply refuse to be deterred by the first  roadblock that comes up in your pursuit of a loan modification — and there  might be many. Commit, instead, to applying for everything for which you might  possibly qualify, and don’t make assumptions about what programs might work for  you (many loan mod programs have loosened their guidelines or gotten more  efficient over time).

Apply through your lender to the federal HARP program, and  also to the lender’s own loan mod program. Visit this  federal site to determine whether there are additional state programs  available to you under Treasury’s Hardest Hit Fund. Apply to the wildly  successful (as these things go) Home Save program run by NACA.

It ain’t over till it’s over.

6. Short-sell it.  Banks are now taking a couple of years, on average, after the first missed  payment to foreclose on and repossess a home. If you list your home for sale  with a local agent who has experience closing these transactions right this  moment, your chances of selling it and having the short sale complete in time  to qualify for the income tax exemption that expires Dec. 31, 2012, are  actually better than your chances of qualifying for the exemption if you stop  making your mortgage payments right now.

Again, it’s ubercritical that you work with professionals,  from the folks at NACA to a local agent and attorney and certified public  accountant (CPA) if you’re seeking a loan mod or a short sale. Beyond advising  you about implications to be wary of, the pros can help educate you about the  full scope of options available to you.

Your best bet is to run even getting a  second job past your trusted advisers before you do it, as it might impact your  prospects of getting relief from your lender.

Fortunately, your options for avoiding a foreclosure are not  so limited as they might seem at first glance.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.