Prepayment Penalty Period.

My plan was to put down 35% while she would cover the remaining 65%.However, the seller has requested to be in escrow for 45-60 days so that he can complete a 1031 exchange and use the proceeds to buy another house within that period.

That said, long-term the appreciation you get in the Puget Sound region is superior to many other markets, so assuming you find an excellent property management company that is able to screen tenants and only put in very well qualified, vetted occupants and you experience limited issues over the holding period, you'd likely come out ahead retaining the Mill Creek property if your financially able to do so and still buy wherever you are headed out of state.

Even though HELOC are higher than cash out refinances, but it gives investors the flexibility to draw their funds and not having to pay the full balances within x years, depending on the loan program and draw periods.

Some rents have gone up 40% or more over that period. 

Does that seasoning period apply if I cash out refi into a DSCR loan?

In this post, I'll talk about key care-abouts and tasks once you sign the contract and are into the due dilligence period:1.

Ask for an extension on the due dilligence period if necessary. 

Yes, it's a 10-year declining dependent up on your term length and amortization period:  What You Should Know About SBA Prepayment Penalties | Pursuit (pursuitlending.com)

The QOZ community believes that there is bipartisan support to extend the deferral period.