One more question at least for now I appreciate so much everyone's help and this may sound stupid but when traveling to Ometepe or Leon for example how do you find a place to stay carrying your suitcases getting off a bus or boat, are things that close?

Why do you need Tica Bus?

Why not wake up, have breakfast, make way to bus terminal downtown Liberia next to market, and get a bus to border every 30 minutes, a 2 hour journey. Once across border, 1-2 hours, just taxi hire from border to Granada...

Do you plan on exploring Ometepe? If so, taxi hire from border to San Jorge, then get ferry to Ometepe...

Then on way back, in San Jorge, taxi hire to Granada...

You will be charged the full price of a TicaBus Ticket, from San Jose to Managua, even though you are only going from Liberia to Granada...the schedule sucks too...

Hey Nate - unless you're just really opposed to heat, you can handle it in Nicaragua. I've gotten too comfortable wearing oversized poly/cotton blend t-shirts and basketball shorts. You're going to sweat. Just makes the beer taste colder and raspados sweeter. Yes, the lowlands are going to be scorched brown but you'll still find green in the higher elevations surrounding Matagalpa, and even during the recent drought there was still enough green on Ometepe to enhance the magic.

Ometepe checks most of your boxes, including renting a scooter for getting around. Try to plan for at least three nights on the island, with schedule flexibility to stay longer. It's one of those places that the longer you stay, the harder it is to leave. Jiquilillo on the northern coast is another place easy to get stuck in. Consider Rancho Esperanza for your beach time. Leon's worth the sweat; air conditioning available if willing to pay for it, but you'll definitely want a long-sleeved shirt and light jacket if doing any of the overnight volcano hikes. If you liked Guatemala, Nicaragua will not disappoint.

But which do you want this time around? I Love Nicaragua; go there if you're looking for an inexpensive budget trip. But if you've got the extra cash and have never been, go to Portugal!

Not sure what your travel pace is, but Coimbra vs. Alentejo/Algarve is splitting your travel directions with only two weeks. Unless you're looking to move around, a lot, Algarve is probably out. One can explore Lisbon for days across its 7 hills mixed with incredible places easily done as day trips. Sintra has several trails leading up to the castle and ruins, numerous palace gardens more like forests, and paths for walking further on hilltops along the coast. Cascais has decent beaches; people were on them in March, more sunning than swimming. Queluz and the medieval village of Obidos are other worthy day trips from the capital.

Consider Nazare for your beach destination on the way to Coimbra. Cool walking areas on the hilltop, but was only ever here in December and so damn cold. Very nice beach front; savory Sea Bass the local catch. All this could easily involve two weeks; maybe head on up to Porto since it's continuing north, and then easy getting back to the capital.

If you're looking for something European, a lot more rugged, and not much if any more expensive, here's a Trip Report for what a 62-mile radius from Naples, Italy got me for two weeks this last May. If you're brave enough to rent a scooter, this area has everything you're looking for.

I can only agree with the others. Went to Nicaragua last year and unfortunately there was absolutely no time for Corn Islands.
Ometepe is a must, the boat trip alone is worth going as you get closer to the volcano island. We rented ATVs and motorcycles and drove around both vulcanos. I recommend to do a stop at "ojo de aqua", it's like a little tropical oasis.
(http://travelshus.com/2013/07/10/ojo-de-agua-ometepes-secret-weapon/ )
Close by you can watch some monkeys!

Leon was really fun, too! While you and the oldest enjoy volcano boarding your wife and the youngest could stroll through the market place in Leon. We stayed in "Via Via", and it was really nice - not sure how family friendly it is though.

As for planning: We were a group of 4 and got to Granada, Leon, Ometepe and San Juan del Sur without any booking ahead what so ever. We were a little more spontaneous, but never had the problem of finding an accommodation. As a family, I'd plan ahead though ;-)
Try to always have some extra cash, usually the ATMs work, but it happened to me in Ometepe and Leon that I needed to try multiple ATMs for them to read my card finally.

While I have not rented a car in Nicaragua I have read lots of reports from people who did rent a car. Some complain about police corruption. Others say they had no problems.

I would go in February as by March and April it only gets hotter and drier/dustier. I would also avoid Easter. On the one hand Easter would be interesting, on the other hand it would be busy and beaches would be packed.

You can easily do it all on your own. But of course you might want to hire a guide here and there anyway.

Would you like to be in a lodge in a village with not many food options besides the lodge's restaurant but with a great view, in nature and a bit less hot? Or in a pretty colonial city with a choice of restaurants and nightlife? For the former choose the Pacaya Lodge, for the latter Granada. I also think you might want to choose a hotel down by the lake if you choose Laguna de Apoyo. From the Pacaya Lodge you have to hike down to the lake or I assume they have a shuttle as well.

If Masaya is still as active as it is now it is not a hike. You drive right up to the crater and are only allowed to stay for a short time. Day 2 I recommend an early boat tour or kayak tour of the isletas, then explore Granada and then Masaya by sunset if you can time it right.

It is best to make a reservation for your car on the ferry. Your hotel can help with that. I would strongly suggest two days on Ometepe. Especially if you want to hike up Maderas as that takes most of the day and you would leave very early. Maderas has amazing cloud forest and seeing the cloud forest is the main reason to climb this volcano. There is also a crater lake at the top. But apart from one nice viewpoint not that high up there are no other views. It is also a steep, tough, often very muddy hike. It took us 7 hours. And after that hike I can assure you that all you want to do is relax. You could just hike to the viewpoint. Or explore the base of the volcano (you can also see petroglyphs). Finca Magdalena has guides or you can find guides in Balgue. For a day tour Ojo de Agua is great, there is also the San Ramon waterfall, there is Charco Verde (nice beach and a nature trail with wildlife, best at dawn or dusk). Ometepe also has kayaking and rural communities and of course the views of both volcanoes.

Only the Corn Islands have good snorkeling.

We travel differently than you do so there is only so much advice I can give. We have stayed at hotels that I would call "authentic" but they were basic. Not modern and certainly not luxurious. We enjoy traveling with the locals by bus and minibus and we sleep at cheap local places and eat at cheap local restaurants. You really only have 5 full days. If it were my trip I would not spend 3 days at a resort. I would want to explore Granada, Mombacho, Masaya, Laguna de Apoyo and Ometepe. Or I would choose Granada and Leon or even Leon and Ometepe.

There are cooking classes in Granada and on Ometepe (in a small community) but I don't know how you would fit that in. I know of a neighbourhood with great street food in Masaya (Tiangue de Monimbo) but again, hard to fit it in.

No, I was on Ometepe last month, and having stayed there before, I stopped at El Porvenir for the view, and I asked them the price. They have a website: http://www.hotel-elporvenir-isladeometepe.com/

Thanks! We agreed corn islands might be a bit too ambitious for this trip, so gonna get our island fix from ometepe. :)

Thank you everyone for you contributions - they are so much appreciated. This forum is brilliant and I appreciate people taking the time out to help my travels be extremely enjoyable ones. I am definitely going ot take you up on some of your tips.
One thing I did wonder is whether it is possible to hire a car from San Carlos.... Or whether there is any other way from Ometepe to San Carlos apart from the twice weekly flights. I dont wish to leave Ometepe before I am ready or have to stay there lots longer than I had planned.
Thanks again everyone :-)