Let's follow the case of a family that has lived in Arlington Heights for a long time. The house is solely in the husband's name, and as they approach retirement, they wonder if the wife can also be protected under a reverse mortgage. The title structure actually affects the conditions of the reverse mortgage.

Looking at the market value in the area where this family lives, the average home value in Arlington Heights is $401,290 according to Zillow, which is a 2.4 percent increase from a year ago. According to the Mortgage Bankers Association, the median listing price in July was higher at $495,000, which reflects the difference between actual sales prices and listing prices. Regardless of the criteria used, this family has built up significant equity in the home they have owned for a long time.

The HECM they are considering is a typical reverse mortgage product guaranteed by the Federal Housing Administration. To qualify, one must be over 62 years old and use the home as their primary residence, with the loan available as a lump sum, monthly payments, or a line of credit. Here, the issue of title becomes important. If both spouses are registered as co-borrowers, even if one passes away first, the surviving spouse can continue to live in the home while maintaining the loan conditions. Conversely, if the loan is executed solely in one name, the surviving spouse may face repayment conditions if that person dies first. If this family starts the consultation without addressing the title, they should confirm this aspect early on.

The tax burden in this area, which is part of Cook County, also needs to be addressed. The median effective property tax rate in Cook County is reported to be between 1.91 percent and 2.14 percent, significantly higher than the national median of 1.02 percent. However, there is considerable variation by township, with Chicago having a lower rate of 1.66 percent, while some areas are much higher. This family should verify the tax rate based on their exact address, and they will still need to pay this tax even after obtaining a reverse mortgage.

If this family executes a reverse mortgage, they can secure cash flow without monthly repayment burdens. HECM is a non-recourse loan, so if the home value falls below the loan balance later, heirs are not required to pay the difference. However, the origination fees and initial mortgage insurance premiums are generally higher than those of a traditional mortgage, and over time, the equity left in the home decreases, which means less asset to pass on to children. They must also be aware of the risk of default if they cannot continue to pay property taxes and insurance premiums.

The next step for this family is to undergo mandatory counseling with a HUD-approved counseling agency. During the counseling, they can receive guidance on how to organize the title structure and the process for registering as co-borrowers. This counseling must be completed before the actual application can proceed, and in areas like Arlington Heights, where there are many families that have lived there for a long time due to good school districts, it is advantageous for this family to also address title and inheritance issues. If they are a family that has moved from another state, it is helpful to know in advance that Illinois has relatively high property tax rates compared to their previous state. Additionally, state laws regarding inheritance vary, so it is wise to consult not only real estate professionals but also attorneys who handle immigration or inheritance matters regarding title issues between spouses.

As of 2024, the population over 65 in Illinois is 17.9 percent of the total, which is similar to the national average. In areas like Arlington Heights, where there are many long-term Korean families, consultations that check both title organization and inheritance planning are increasing. As seen in this family's case, even just the title structure can lead to significantly different outcomes, so preparing documents in advance for the consultation can save time. A reverse mortgage requires mandatory counseling with a HUD-approved agency before applying, and issues related to spouse titles should also be re-confirmed through this counseling. This article is not investment or legal advice, and it is recommended to consult with professionals before entering into any actual contracts.