Need to do a Factory Reset for iMac late 2011. How do I do it with little hassle

I recently purchased a iMac (late 2011) from ebay and it did not come with a Disc. I keep seeing that it will require a disk. The Current operating system is 10.7.5
Im eligible to download Moutain Lion from the Apple Apps store but  I dont know when to do it? Before or After the Factory Reset
What do you I need before I get Started? Will it just erase everything and start brand new? (what im looking for)
It seems to be running slow and Im really really new to MAC operating systems so if  someone could please walk me thru this it would be greatly appreciated.
Thank You !!!

Did the selller tell you what version of OS X was installed when the machine originally purchased. If it had Snow Leopard on it you have an illegal verison of OS X, as the license for Lion and ML upgrades are not trasferable, they're also  pretty useless to you because they're tied to the old owner's AppleID. If you are not sure or cannot find out then call AppleCare.
However if the machine originally shipped with Lion on it, the simply restart in the Restore Partion, do and erase and install and you're set. You can start in the Restore Partition by holding down the Command + R keys when you hear the startup tone and then choosing the Restore Partition and open Disk Utility.

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    View Solution.

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    ****Please click on Accept As Solution if a suggestion solves your problem. It helps others facing the same problem to find a solution easily****
    2015 Microsoft MVP - Windows Experience Consumer

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