Hello there to all the creative bees!
Here I will show you how easy it is to design an overlay using the existing PSD files, and how to create one from scratch!
TABLE OF CONTENTS
Using an existing PSD file:
Starting off - open one of our existing PSD files-
You can see that the layers are named and separated.
In this PSD we can see we have 3 folders - Back, Bats and Halloween. The Back folder contains the shape and image of the overlay itself, the Bats is for the images of the bats that are on top of the photo, and the Halloween is for the Typography above the frame:
You can clean out all the elements that are irrelevant (Halloween and bats folders in the example), and make it look like this:
Now that you "cleaned out" the PSD file, you can add your own design very easily.
1. Add the image/pattern you want to use as the frame
2. Place it above the overlay layer:
3. Highlight the new layer you added, and press Alt - you will see this icon: 
+ left click on the cursor.
This would be the result:
In order to add graphic elements to this overlay, you can do it easily by dragging the image into the Photoshop window.
Starting From Scratch:
Open a new file in Photoshop:
1. size 1200x1800 px
2. Resolution 300
3. Color Mode: CMYK
once you do that, you will have one layer in white, and it will be locked. Press on the lock icon- the name of the layer will become layer 0.
Now we'll create a square in 2:3 ratio:
Change the size and the position of the square to where you want the photo to be, and keep the ratio 2:3.
After placing it, highlight this layer and press right click on the cursor.
Choose Rasterize Layer:
Choose the Magic Wand tool, and select the black square we created.
press right click on the cursor over the selected area and choose Select Inverse
While it is still selected, highlight the first layer again, and choose to add a Mask Layer:
Now you have created the base for your overlay!