Can a reverse mortgager be a good idea

First, We need to know: what is a Reverse Mortgage?
In a normal mortgage or home loan, the borrower pays for the house over the years to the bank. Reverse Mortgage is the opposite of a regular mortgage. It is a product primarily designed for retired people who are not able to support themselves but have assets in the form of house properties. 
In a Reverse Mortgage, a retired person mortgages his property to a lender (bank), which then makes periodic payments to the borrower so that borrower can meet his monthly expenses. Unlike a home loan, the borrower is not required to make regular monthly payments towards principal and interest to the Bank. 

During the reverse mortgage period, the ownership vests with the borrower. When the borrower dies, the mortgage is paid by legal heirs and house is handed over to legal heirs, or if the loan is not paid back, the bank auctions the house to recover its dues.

Reverse Mortgage can be a good idea if you keep the emotions aside and look at it purely from a financial perspective. Let us look at the negatives and positives surrounding Reverse Mortgage, so that you can decide whether it suits you or not. 

Negatives surrounding Reverse Mortgage:

• Society Pressure - Home is generally looked upon as a sacred place. If you talk about liquidating your primary home, it is not taken well by anybody especially children. Children see it as giving away their family home and wealth.
• Higher Costs - Most banks charge a higher interest rate on reverse mortgage compared to a normal home loan and the valuation of the house is also in the hands of the bank. You may not get the real market value.
• Loan Liability if the owner moves or dies - A Reverse Mortgage becomes due in full if the owner dies or moves from the home. Paying such a high amount upfront can be difficult for both the owner and the legal heirs.

Positives of Reverse Mortgage:

• Better Monthly Cash Flow - Many retired people have assets in the form of house properties but do not have reasonable monthly income to support their monthly and medical expenses. Reverse mortgage is a perfect tool for such people.
• Tax Benefits - In India, payments from Reverse Mortgage are made tax free. So, you don't have to worry about any tax payments.
• RMLeA (Reverse Mortgage Loan-Enabled Annuity) - You can get even higher monthly payments if you go for RMLeA. A Reverse Mortgage Loan Enabled Annuity (RMLeA) is an advanced Reverse Mortgage product in which the bank instead of paying you directly, pays one lump sum amount to an insurance company. The insurance company then makes monthly payments to you based on actuarial pricing.

To know more about Reverse Mortgage, RMLeA, their eligibility criteria and other features, I suggest that you go through this Reverse Mortgage Guide. You will get good insights.

Morever, in a reverse mortgage, instead of you slowly buying all of your house by paying off the mortgage lender, the lender slowly pays you and, at the end of the contract, you owe the lender the loan balance (although almost all reverse mortgages in the US have non-recourse provisions that prevent borrowers/estates from owing more than the value of the home).

This financial instrument was designed for people in retirement who want/need income and wish to convert the equity in their house to cash but don't want to sell their house and immediately move. At contract termination ("maturity"), the homeowner owes however much the loan was increased to.

In the standard situation, structuring a reverse mortgage usually involves an actuarial calculation (a prediction of how much longer the homeowner is expected to live, and therefore need income). If the home appreciates over the term of the loan, happy is the homeowner (one presumes s/he might be able to further extend the reverse mortgage for the additional home value [usually this would require a refinance of the reverse mortgage to access any additional home value]), or his heirs (there will be money left over if the home is sold to satisfy the loan [but sale is not a requirement, balance can be paid with other means]).

There is, of course, a presumption in such a contract that the collateral asset (the home) will at least retain its value, if not appreciate.

Whether any financial instrument is a good idea depends entirely on a sober, rational assessment of one's own situation. I have no doubt that many reverse mortgages are written both

1. with poor terms, and/or
2. for situations that don't match my description above.

One must always remember that, in a contract, there are two parties, both of whom believe the contract is a good idea at execution time. Sometimes a neutral third party observer would agree, sometimes not.