The current housing market has made great news for the past year or so as more and more people are struggling to keep up with their mortgage payment.  For many, what was once a dream has quickly become an inescapable nightmare.  If you're in this boat I feel for you.  It's not easy to have a dream disappear right in front of your eyes.  In fact, that's probably the understatement of the year.  Please understand that some of what I'm about to say may make you angry. 

However, I believe that a thorough self evaluation of our bad choices is the only way to learn from them so that we do not make the same mistakes in the future.  Most of you are in mortgage trouble for one of two reasons. 

First, you bought too much house.  You probably knew better but relied on the bank to give you enough rope to hang yourself, and in a moment of what could have been temporary insanity, bought more home than you should have.

Second, you didn't qualify for a standard fixed rate mortgage so you chose to get into a sub prime loan with rip off adjustable interest rates.  Now the interest rates have adjusted and you can't afford the payment anymore.  You assumed that your home value would always go up and that you would be able to sell the home before the interest rate adjusted.  Now, you're stuck, sinking fast, foreclosure is looming and you feel like a dead man walking.

What you do depends on your situation.  If I were in your shoes, I would look at the following:

- Are you on a budget?  If not, get on one.  NOW.  Today.  This is the best way to determine whether or not you will need to sell the home.

- Once the budget is in place, you need to determine if your mortgage payment is more than 35% of your take home income.  Dave Ramsey recommends a 40% bar.  You choose.  If you really like the house and are willing to sacrifice, then 40% of your take home may be manageable.  If you are above 40% and I were in your shoes, I would sell the house.  You have too much of your income ensnared in a mortgage payment.

If you're married, you and your spouse need to agree on what you should do.  The bottom line is this.  If your home mortgage payment is too high a percentage of your take home pay, the rest of your financial plan will move slowly if at all.  It's your call. 

Will you make the tough decisions necessary to succeed?  I know that selling a home isn't easy.  It will likely be very frustrating and potentially heartbreaking.  However, if a home is what stands between you and achieving more than you ever thought possible, then you need to consider what you really want in life.  May you have the courage to make a decision and act on it!