Now press ctrl+shift+I/cmd+shift+I to select inverse. Press M to select marquee tool and then in the option panel click on refine edge. Now add a feather of about 30 pixels. Press OK.

I have written a whole tutorial on Blending Modes in Photoshop and you should check that tutorial out if you are not aware of the power of Blending Modes.

14_thumb4 - Create Instagrams WILLOW Effect in Photoshop CS6 | TrickyPhotoshop

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Suggest one tutorial that I MUST write.

Here Ya Go!
Give it a try at least.