The short answer - we Definitely recommend going with a high quality wood and having it finished/oiled with Waterlox.
UNFINISHED WOOD: There's nothing intrinsically "wrong" with unfinished wood. But remember - you are truly getting unfinished wood. It can & will easily stain (if anything ever spills on it - and with my own kiddos I know it certainly would at least!).
There is a ton (no, seriously, a ton) of maintenance with unfinished wood. If you do get a spill you have to wipe it up immediately. Not just because it will leave a stain (it will), but also because the added moisture from the spill can (and eventually will) change the moisture in the wood and can lead to rotting, cracking, warping or all of the above.
FINISHED WOOD: We use Waterlox brand on our wood tops. The reason it's WATERPROOF is because it's a crosslinked modified Tung Oil. Basically, the oil goes into the pores of the wood, and it's sealed from the inside out. That means that it's not a separate layer of urethane on top of the wood. The wood Itself is actually filled/finished. (myth- people assume wood can't be waterproof which is totally wrong. It just depends on the finish.)
How to Clean a Waterlox-ed wood countertop:
http://youtu.be/SjzDCXp-wbE
How to Re-Apply a top coat to a Craft Art wood countertop with Waterlox (every 3 to 5 years):
http://youtu.be/Gj-dc6I5__k
WATERPROOF: With Waterlox you will never get white rings, and you can certainly have an undermount sink without worry. White rings are a result of condensation between the wood and whatever finish is on top of the wood. If the finish is literally IN the wood, there's nowhere for condensation to exist, and voila! No white rings!
VERY STAIN RESISTANT: The pores being filled are also the reason that it makes your wood top food stain resistant. Stains are when the food (like mustard or red wine) get into the actual wood. With the Waterlox finish that isn't a physical possibilty which means (voila again!) no food stains.
You DO need to use a trivet for things like pans of hot oil right off the stove. Waterlox can be damaged by high heat. Basically, treat the wood countertop like any countertop and use a cutting board and a trivet.
The maintenance of a waterloxed wood countertop is very low and is very similar to granite. Any non-bleach, non-amonia cleaner will do. We actually recommend a vinegar water mixture. It's cheap, easy, and a gentle natural disinfectant. If you notice in 3, 4, 5 years that water isn't beading up on the surface as well as it used to then its time to "re-seal" (apply a fresh top coat of oil similar to resealing your granite).
How to Know When to Re-Apply Oil (typically 3-5 years):
http://youtu.be/tibSOJpG4Qo
Longer answer than you were expecting, huh? I hope it helps, though! Best of luck.
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I got laminate and wood!
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