Northern Germany in Late July/Early August

I was planning on visiting in June until Covid. I planned on staying in an apratment in Lubeck for a few days. I planned on visiting Hamburg and also Ratzebueg ( https://www.youtube.com/watch?v=vbVYou0NHrY)

There's always Hamburg.

Presently, it is not allowed to stay in any hotels as a tourist. This regulation is in effect until 30 June. What they do for July may not be decided until the end of June.
Right now, only about 20-23% of the residents in Germany have had at least 1 vaccine.
Personally, I would not plan on a trip here in July.

It's hard to say what the covid situation will look like in late July. But in general, northern Germany is an underrated area that deserves more attention. Hamburg is the big city that dominates the area, but there are several smaller towns worth a visit as well as beautiful nature.

"...we enjoy walking and sightseeing small towns and other interesting sites."

Northern Germany has no shortage of options.

Lüneburg is an outstanding little place near Hamburg, with easy access by direct train. Earl Steinbicker - whose travel focus you seem to share - provides a quickie-guide to the town, including a suggested walking tour:

https://lifeslittleadventures.typepad.com/lifes_little_adventures/2009/09/

Not far from Lüneburg you can find a collection of other nice towns which belong to the "Fachwerkstraße" or German Half-Timbered House Road, some on the rail network, some not. I've visited a few of the places on the list below, including Celle, Wernigerode, and Northeim, all of which were worth my time. My bucket list for Germany includes another town on this route - Einbeck - strongly suggested to me by a dependable travel buddy, with a website for visitors. See links below.

https://www.deutsche-fachwerkstrasse.de/en/Routes_Cities/From-the-River-Elbe-to-the-Harz-Mountains.html

https://www.einbeck-tourismus.de/ (German)

Einbeck Beer trail route (English) https://resc.deskline.net/documents/1/DE1/a6ebe4de-df5e-4fd3-bb12-1dcedde9f524/Bierpfadflyer2.pdf

Goslar (near Wernigerode) isn't on the Fachwerkstraße but is an excellent destination as well.

Hannoversch Münden is very nice too and home to some 700+ half-timbered buildings.

Bremen isn't quite as small but it's both pedestrian-friendly and enjoyable and quite an interesting town. Steinbicker has a guide for it too - just scroll down...

https://hastingshouse.typepad.com/hastings_house_us/travel_in_europe/

"...maybe hitting a coastal town..."

stephen mentioned the port town Lübeck; I found Lübeck worthwhile too.

I have not been to Travemünde, but it's a very popular beach town that's easy to reach from Lübeck.

Lake Prien, north of Lübeck, isn't on the coast but is a big summer destination and quite a beautiful place.

You might have trouble finding accommodation if that is even possible by then. I can’t speak to that. But northern Germany is HIGHLY underrated! Of course, I am biased.

There won’t be much in the way of festivals this summer, naturally. But in normal years, Expect Hamburg to host Hafengeburtstag in early May, Schlagermove in mid-July, Harley Days (July I think), and the Dom, the big carnival, from late July though late August. Right now even most of the famed Reeperbahn is COMPLETELY shut down. Food truck festivals, flea markets, Blue Port, cruise days—all are cancelled.

Another key thing to do in Hamburg is go to a musical, but that is also a big question mark, as is the fish market.

The small towns aren’t going to be much better. Glückstadt‘s famous Matjeswoche? Yeah, nope. I doubt Kieler Woche will take place. You get the idea. Karl May Spiele Are probably cancelled.

But if you can get a place to stay and are happy walking on the most amazing beach, visit St Peter Ording. Or maybe Helgoland or Sylt or Travemünde Are Good options. You might also consider towns like Wismar, Goslar, Verden, the aforementioned Glückstadt, or maybe Schwerin. You could see the cave at Bad Segeberg or walk the Lüneburg Heath.

So much to see and do here!

" Highly Underrated" ….How true !! I am just glad I spent most of my first trip in Europe and Germany 50 years ago in North Germany

This trip report has a section on the Baltic coast.
https://community.ricksteves.com/travel-forum/trip-reports/baltic-germany-fachwerke-landesgartenschau

Assuming there are no border restrictions, Copenhagen is also close to northern Germany.

It appears Germany is getting ready to announce the welcoming of vaccinated Americans much like Spain and Austria will beginning June 7. Late July is a ways away and will allow their people to get fully vaccinated. Look how fast we were able to get out of the COVID grip. Here in AZ it is almost business as usual. I commend you for booking your flight and taking the leap of faith. We are booked on American Airlines using miles August 12 to Barcelona.
Northern Germany holds many gems:
Hamburg is well worth your time.
Lubeck on the Baltic Sea is a must!
Travemunde (near Lubeck) is a gorgeous seaside tourist town.
Kiel is very nice
Schwerin and it’s castle are spectacular
Wismar and Rostock garner a visit for sure
I hope this is helpful and inspires you to keep planning!