What should I do if my mother-in-law wants to be on deed of house? How?

A mortgage does not show ownership, it shows you borrowed money. You need to check that the bank would lend you anything with her not being a co-signer on the loan as normally they would not [if she owns 1/4th of the house, then the bank can only look to 3/4th of its value to guarantee their loan to you, and they will not lend you more money than the value of your interest is in the property, and normally they are not allowed to lend more than a certain percentage]. She also is responsible for her percentage of the property taxes, but the county will look to you for the full amount as they do not take partial payments. In any such agreement, you need to spell out in writing what everyone's duties are, how the house can be sold, can she transfer her interest to someone without your permission, what are her rights of usage [all owners have the right to live there and can not be charged rent absent an agreement to the contrary]. What happens when she dies to whom does her interest pass, will you have to sell the house, etc. You both have to think very hard as to whether you want this type of arrangement [as opposed to her just having a second mortgage that is acceptable to the primary lender]. Speak to a local real estate attorney as such a deal can become very messy.

See an attorney and offer her a second mortgage on the house.