setting up site on temporary url

HI, I don't think there are any posts on this already. I am building a site on a temporary url to replace an old html site (hosted on a different server) When it is ready, I will redirect the dns to the new site. The webhost has suggested that I configure my new site for the proper domain name now, and change the host file on my computer so that I can access it(I know how to do this bit). I'm wondering how I can configure the domain name on the development site - do I just change the url and homepage address in wordpress admin, and then change host file?
thanks, a bit confused by this. I have back up buddy plugin and was thinking that maybe I should use this?
thanks,
RIa