Is it worth taking out a mortgage to pay off another property

I have been pondering the prospect of refinancing one property in order to finance building our retirement home. We own vacant land that we plan to move to in about five years. I received an offer from my current mortgage servicer offering to refinance our mortgage to provide us with about $150,000 equity. If we did this our interest rate would drop about half a percent, but we would be hit with the VA funding fee (probably 5k more or less).

The up side for us would be no matter what happened with the economy, we would have a home that was paid off free and clear. From a prepping standpoint I think that's a huge advantage. The only down side I see is the VA funding fee, and an increased mortgage payment (which we can easily afford to pay).

Anyone have an opinion as to whether this is a good plan or bad?

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Is it worth taking out a mortgage to pay off another property