I think yes, they both sound okay and given the only context this is likely to be used in, they mean more or less the same.
Wow, level 22 in Polish, I think that's the highest I've seen, congratulations!
I know the result is the same this time, but is "u" normally followed by loc. or gen?
Well, that's already "w mieszkaniu babci", too different. I don't think that many people apart from you try answers like 'grandma's flat' anyway.
Does this sentence has an "our" hidden? Like "My nie jesteśmy u naszej babci"?