The negative impacts on your credit can be quite damaging. You would be better off to try and restructure the mortgage with your lender. However, in today's world most banks are not interested in working with lenders unless you are using one of the government programs that are out there. If you absolutely want out of your obligation, you would be better off to try and sell the house. I assume you are underwater, so you would want to work with someone that has experience with short sales.
That's a very BIG question, and hard to answer without a lot more specifics. It depends. It should probably be avoided if possible. Have you considered a Short Sale, instead?
While not something I advocate, there is a case and precedent for "strategic foreclosure." More folks who are under water are finding it makes more financial sense to walk away from a loan. Obviously, this will create a big hit on your credit score which may adversely impact your odds of getting good credit rates for future loans or credit cards.
But it is undeniable that folks have found they can find a replacement property at a lower cost by walking away from an "underwater" property.
Depending on state rules, you may even be able to live in a property for a long time without making any payments at all, saving the money for the move and money needed for setting up an apartment or a different purchase (albeit through a higher-cost hard money lender).
A better option would be a short-sale but as a friend of mine found out this has been complicated because the servicing lender went into bankruptcy itself and is being absorbed by another lender.