There are certain unmistakable tell-tale signs that will help you figure out if you need to invest in a whole new system or if a simple service call might do the trick. You probably need a new system if:
Your current heater is over 12 years old
There is rust-colored buildup on the top of your unit and rust-colored water is coming out of your taps
You're running out of hot water much more quickly than you used to
Your water's not getting hot at all
Your unit makes popping and crackling noises during the heating process
Your unit is leaking
A quick overview of tankless systems
If you are in the market for a new water heater, now is the time to do a little research and determine whether you want to go with a tank system again or opt for a tankless model. Here is a brief buyer's guide for those of you who are seriously considering going tankless.
Unlike tank systems, tankless water heaters do not store up a supply of hot water: rather, they produce hot water on demand. High-powered burners or an electrical unit heat water super-fast and deliver a virtually endless supply where it is needed: quite a boon when you have teenagers in the house who are overly fond of long showers! In general, gas-powered units can supply a longer flow than electric ones.
If you anticipate running simultaneous applications demanding hot water (such as a dishwasher while someone is showering), you may wish to choose a "whole house" system or invest in two separate systems to meet the needs of those high-demand times.