Of course this is not a one word answer.  However, there are some general rules that you can apply here.  First, we have to realize that from 2002-2007, there was A LOT of fictitious value created in the global housing market.  I think most people are well aware of that and they have accepted that we will not be going back to the pre-bubble levels (2007) seen in housing anytime soon.

The reason I say this to you is in case you are still in a house that you can’t afford because you think its still worth what you paid for it back in 2005, 2006, 2007.  You know; you’re staying there because you still have equity.  Remember that equity that was created from 2004-2007 is poof gone.  So, if you’re supporting an inflated mortgage and waiting for things to go back up, its time to ease back from those expectations.

Now, back to today’s subject.  If your mortgage is more than 45% of your take home pay, you need to realize (regardless of the home value) those payments will literally sink you financially.  There just won’t be enough money to go around for everything else and something will eventually give.   So, unless you’re expecting an inheritance or serious income jump, I’d sell the house to get out of debt and/or even just to give yourself more breathing room.

I know that sometimes it’s easy to fall in love or become emotionally attached to a home.  But you know what?  There are some really good deals on rentals all over the place right now.  You can even make a deal with an owner for a first month free.   Sometimes it’s necessary to sell your home if you can’t afford the payment. If that’s the case, most often doing so will help get you out of debt even sooner.

“Well done is better than well said.”   Benjamen Franklin

No related posts.