Brian Gindlesperger says he has never been late on a mortgage payment and considers paying off his loan “the right thing to do.” But as the value of his home continues to fall, he is starting to wonder whether paying his debt is the smartest thing to do.

Four years ago, Mr. Gindlesperger, a police officer, and his wife Kelly, a real-estate agent, paid $650,000 for a four-bedroom house in this wealthy Phoenix suburb. They believed they were getting a bargain price for the area and made a 20% down payment, using a 30-year fixed-rate mortgage to pay the balance. To help pay for their eldest daughter’s college costs, home improvements and a wedding, they took out a second mortgage against their home. Now they owe about $647,000 on the two mortgages.

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