I'm sorry to hear about your wife.
I know you'd like to get things settled as quickly as possible, and that's why you're thinking about walking away from your home. As you are already aware, this is going to damage your credit and will affect you ability to buy a new home in the near future.
Foreclosure is the "easiest" way out - just stop paying and eventually the bank will foreclose. This, however, is not necessarily quick, since there hundreds of thousands of foreclosures across the country. If your lender takes a long time to finish the process, then it will also push back the date when you will be able to obtain a new mortgage. In terms of waiting period until getting a new mortgage, foreclosure requires the longest waiting period as opposed to other options, described later. The waiting period is (for conventional mortgages) after foreclosure is 5 years; if there are extenuating circumstances, then the waiting period is 3 years. Also, depending on the recourse laws in your state and any additional mortgages/HELOCs that you might have on your property, this could open you up to deficiency judgements.
Another option would be to work with your lender to negotiate a deed-in-lieu of foreclosure. Some people refer to this as "giving back the keys". The waitng period after a deed-in-lieu is 4 years, or 2 years if there are extenuating circumstances. I believe that if you go this route, it's possible to ensure that the lender will not seek a deficiency judgement, if your state's recourse laws don't otherwise protect you. The effect on your credit score is going to be more or less the same as a foreclosure, however.
A third option would be to do a short sale. Since you're not behind in your payments, this could be the best option, but it can be time consuming. The other two options above would probably be equally time consuming. "Short sale" is sometimes used synonymously with "preforeclosure sale", but this is not entirely correct. If you go through a short sale, the waiting period to obtain a new mortgage is 2 years, but if you are not late at the time of the short sale, then there is no mandatory waiting period. Your credit scores will still suffer, however, possibly as much as with a foreclosure or deed-in-lieu, but there's also a chance that the score drop won't be as drastic.
FHA mortgage waiting periods, by the way, are different from that above (more lenient), but I'm not as familiar with FHA loans as with conventional.
With regard to what any of this will do to your credit cards, well, unfortunately it's going to be bad all around. People who have undergone foreclosures, deeds-in-lieu, and short sales have seen their credit cards canceled and/or credit limits slashed to the balance owed. The credit card companies are doing this to folks with good credit; the moment they see a major derogatory on your credit report they won't hesitate to do the same.
Again, I'm sorry for your loss and your difficulties.
