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Flashing is probably leaking, but the chimney mortar is also dripping into the wallspace and crumbling apart. Two likely problems, both need to be addressed soon, and we are in this house for the long-haul so I am inclined to do it right the first time. Chimney cap is actually fine - the problem is more related to which solution will be most beneficial in the long-run. On one hand, we fix the chimney and move on with our relatively new 80% furnace. On the other hand, we get rid of the chimney and any potential problems it could create while installing a 95% furnace and water heater. In my discussions with heating folks recently, they don't think there is any merit to the idea that the 95% unit will cost more in the long run other than it contains an additional motor and circuitry and, as always, more parts = more opportunity for problems.
Our neighborhood was built almost entirely before 1935, so pretty much everyone has a chimney of some sort. It is worth noting that ours is just a little stack for the exhaust, not part of a fireplace or some more elaborate chimney masonry.
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