If my in-laws are looking to transfer their home and mortgage to my wife and I, what would be the best option for this transfer?
The best way to accomplish the real estate transaction that you are planning to do with your in-laws, you need to have a formal contract and escrow set up setting forth price and terms. In the interim you need to apply for a loan to do the purchase where when escrow closes you take title by way of a grant deed with a brand new loan in place assuming the terms are better than the one already in place.