Sometimes you don't need to do that, it depends on the borders of the image you're blending. For the 2nd layer, you need to Add Layer Mask. Go to your Layers window, and choose this icon:

Now use the Gradient Tool, and make sure it's set to Black to Transparent.
Drag lightly between the two images until you get something that looks nice. Smaller drags work best. This is my result:[Screenshot]