How to deal with power hungry mother-in-law?

When wife and I got married, she graciously let us live with her while we saved for a place of our own. about 2 years ago she decides she can no longer afford the upkeep and mortgage payment, so she offers us the house. After carefully thinking about it, we humbly take the offer. the paperwork is finalized, and it is officially our home. She is 70, so it is decorated in the "old lady" style. Now that we plan to decorate it our way, improve certain areas, she gets in the way and makes it known that she is not happy. Makes us feel so uncomfortable making any changes or decorating a certain way. We feel like we are renting even though we are paying all the bills. She thrives on having control of situations and people. But if she was gonna be this way, she should have told us this from the beginning, and we never would have accepted to take over the house. Feeling ripped off. How do we deal with this?