good points from brucethebroker in that perhaps a partial loan and the rest in CDs makes really a lot of sense as we had not thought of that. to answer your questions, if the house value falls then our thinking is that wherever we would move to (if we followed the kids) would also be in a decline (we hope!).
This thread kind of interests me although I am not sure why. One thing I have noticed over that years is that everyone is an expert on Seattle, often because they lived somewhere around here years ago, or perhaps they came here some summer to take an Alaskan cruise.
I think your reasoning as expressed here may mislead you seriously. This recent house run-up is spotty, not everywhere like in the 00's. In Seattle anyway, it is based on relatively well paid young software developers and ancillary employees. This is a strong effect in maybe 10 metros. Also, here it is likely to cost you roughly 10% of your selling price all-in costs to get out. And, it may not really be possible to sell at anywhere close to what you paid going in. Or sometimes, even to sell at all.
I bought my condo within 1 mi of Pike Place Market for half of what it had sold for several years earlier. 30% of the units in this building were in foreclosure.
Also, you didn't say where your children live. Traffic is basically horrible on I-5 much of the time. Lake Stevens is much closer than most of Marysville, and Arlington is farther yet. Furthermore, no need to go onto I-5, just straight west over a bridge into Everett. Not sure, but there are likely quality apartments right in nicer parts of Everett as well as Lake Stevens. And of course houses for rent. Thank heavens for divorce, right?
Re noise-I live in a condo and I have never heard any neighbor, except occasional footsteps from above. A great deal depends on the layout and quality of the building. If you are moving from the middle of a cornfield and you have extreme aversion to sounds of other humans, then you understand this and anyway you ruled out discussion of this. Generally there is more neighbor noise in a suburb with radios, lawn mowers, leaf blowers and barking dogs than in a true urban environment.
Ha