Times are hard and many people are struggling with their mortgages these days. The situation is particularly disheartening in markets undergoing a downturn – homeowners could actually owe more money than their houses is worth. Hence, there are worries that the additional mortgage payment won't make much difference as equity in your home; yet, you'll still be under obligation to make mortgage payments.

If you are struggling with your mortgage payments in addition to a gloomy real estate market, here are four questions you should ask yourself in order to make an educated and smart decision.

Does the market have good odds of recovering soon?

The real estate market goes through cycles of famine and feasting, with long periods of relative quiet in-between. The problem however is that it is not very easy to predict how long a market boom or bust will last. If you owe more money than your house is currently worth, you may want to wait out the downturn, especially if you can still find ways to squeeze out the mortgage payments.

Staying put and making the mortgage payments will keep a roof over your head. In addition, you'll eventually reduce your home loan debt and you'll find yourself back in the money when the real estate market returns to the boom cycle. Your best bet is to think long-term instead of chickening out at the first sign of trouble.

Can you afford making monthly mortgage payments?

Staying put and waiting out the storm as advised above is contingent on your ability to keep making your mortgage payments. If you are finding it hard to make mortgage payments and you still owe more money than your house is worth, you'll need to review your options. Unfortunately, selling might not be the right option because the market is down already and you'll still end up taking a loss on the sale.

You may want to talk to your creditors to explore the possibility of restructuring your home loan for lower payments and a longer term. You may also want to consider locking down an APR so that you don't have to worry about sudden increases in interest rates and a commensurate increase in your monthly payments.

Will selling your home be a smart option?

If you owe more money than your house is worth and you are unable to keep making payments or work out a deal for an affordable payment plan, selling your home won't necessarily be a bad idea to consider. A short sale with the bank can make it easier for you to sell because the bank will agree to take a lower amount than the nominal value of your loan.

If you are already missing mortgage payments and foreclosure seems like a foregone conclusion, your mortgage lender will be open to the idea of debt forgiveness on the difference between the home loan and on how much you are able to get on the sale of the house.

You may have to walk away from it all with foreclosure

If your debt is more than the value of your home, you can't afford to make monthly payments, the bank doesn't want to work out a deal, and you can't find a ready buyer – you may want to consider going into foreclosure. Going into foreclosure means that you'll give up on the home and hand it over to the bank. Of course, you might want to inform the bank about your plan to go into foreclosure; otherwise, the bank will put the home in foreclosure automatically when you start missing payments.

You should note that going into foreclosure will hurt your credit score, and you should only take this option as a last resort. It is also important to note that the bank can come after you if the price at which they sold the house is lower than the amount of debt you have on file.