Being "underwater" means you owe more on your home than it's worth. Of course, it's only a problem if you can't make your payments and are either thinking of selling to rid yourself of the mess you created, or you are facing foreclosure (and financial ruin).

According to an analysis by Comstock Partners, a Yardley, Pa.-based asset management company, 70 percent of borrowers who took out pay-option ARMs in the last year owe more now than they did when they got the loans.

Those people made minimum payments on pay-option ARMs, or their homes' values dropped or both. However it happened, they are underwater, more than a fathom deep.

Homeowners most at risk of being underwater:

• Those who bought during the past two years, put little or zero down, and have interest-only loans. These people started in the hole, when they bought, assuming they'd have to pay an agent's commission, if they decided to sell. Things only got worse for these people.

• Those who are making minimum payments on pay-option ARMs. The minimum payments on these types of loans do not ever cover the interest and principal due each month; the leftover amount due gets added to the loan's principal.

All is not lost, however.

There are ways to get out of the predicament.

Not surprisingly, it's gonna be painful.

*** If this becomes a bigger problem for more people, you're going to start hearing sob stories about how people didn't know what they were getting into when they took out their interest-only or negative-amortization loans. Don't believe these people. They aren't idiots. Many times, they just bought houses too big for their budgets.

Complete details: How to avoid going underwater on a mortgage - By Holden Lewis, Bankrate.com